Creative Financing for Duplex in Bay Area

[Nicole Chang]

Hi BP Community,

I have a creative financing question that I was hoping people with experience could help weigh in on:

I currently own 4 SFH, one of which I live in and am doing a live in flip/live in then rent situation (2 in the bay area CA, 2 in Louisville Kentucky). I work a W-2 job and my DTI is basically maxed out with these homes so I doubt a traditional lender will work for this potential deal and need to think of creative financing options, the seller said he is open to seller financing but I want to make the right offer from the start if i can.

The Duplex:

Price: 1.3M

Unit 1: 3 bed, 1 bath, backyard, rents for 3100/month

Unit 2: 4 bed, 2 bath, backyard, rents for 2800/month

I live down the street from the duplex and grew up in this neighborhood and know it very well. It's a highly desirable place to live for families because of the amazing school district and proximity to San Francisco and Silicon Valley. 

I'm curious as to why the duplex has been on the market for so long and will ask the seller these questions and of course do my due diligence on the right price to offer, since it needs some work to be updated. If everything checks out and it ends up being a good deal at a certain price what are some ways to use seller financing to get the deal closed?

[Account Closed]

I've purchased 3 properties over my lifetime with seller financing.  The only reason a seller will consider it, is either because they want to make more money by financing the deal with a higher interest rate than they can get from other investment options, or they can't sell it to anyone else with traditional financing.

So, the good news is that if they are considering financing the deal, they are basically desperate for some reason.  

The bad news is the same as the above - why can't they sell it to someone with traditional financing?  Something is wrong with the property probably.  A very tiny possibility is that they are just greedy.  But, more likely is that something is wrong - something's hinky with building permits, etc.