Seller Financing - Got one on the hook!

[Matt Hudson]

Last week I received a call from a mailer. The gentleman asked me abruptly, "How much will you buy my house for?!". Before I could reply he proceeded to berate me and call me a "f*#$%ing vulture". 

Fast forward to today I get a call from a nice lady who rents her a house in East Nashville. One of the hottest markets in Nashville and just down the street from my home. She owns it outright and is willing to talk about a purchase. I WANT THIS HOUSE!

She has had the same renter for 15 years and the renter takes great care of the house. I drove by the home and it look like an older woman that has really put her roots down. 

East Nashville, like many other urban neighborhoods, has seen major gentrification. Affordable housing is an issue and older renters and homeowners are getting displaced. The idea of contributing to this doesn't appeal to me. How do I structure this deal while keeping the tenant?

I'm not certain what the current tenant pays but I 100% guarantee it's not the $1500/mo rent the house could get. It's likely $750-800/mo.  

[Dan Beaulieu]

Hey @Matt Hudson! Congrats on the lead! Sounds like she is a perfect candidate for seller financing! It's important to uncover her motivations and see what is most important to her. Most often a tired landlord would LOVE to keep the passive income but not deal with the headaches. I always approach seller financing by explaining the tax advantages, and proposing monthly payment amounts close to the rent that she was getting if it was way under market instead of proposing a certain interest rate. Often times by doing this you could get the interest rate very low, if not 0. 

You can give the seller 2 options:

For an all cash sale: Pay Capital gains all at once and then take what is left over and invest it with higher risk or have it sitting in the bank losing money.

Seller Financing Option: Take the entire amount, only pay taxes on the installments, and earn interest on what would have been the government's money... 

Lay it out there like this and she is almost certain to go with this option (Especially in Tennessee with it's strong anti-government sentiment)