Seller Financing Pitch

[Anthony Catoni]

Hi Everyone,

I am trying to work seller financing with this deal, but don't know how to try and convince the seller it is a win-win for both parties.

The Property: 3 beds/1 bath

Listed for $285,000, seller will accept $265,000 according to agent. It needs quite a bit of work and would not qualify for traditional financing. 

The Seller: 74 years old. She has some cash offers on the table, but isn't really in a rush to sell and wants to try and get as much as she can. She is living in another city now. According to the agent, she isn't interested in seller financing. I asked him if he would present my offers to her regardless and he agreed. Waiting to hear back now. 

My Proposals:

I sent over 3 separate offers. The house will need about $100,000 of rehab before it can be rented out. Comps in the area are going for $350k - $365k. My proposals used an ARV of $350k, with all in budget of $245,000. Rental comps in the area are going for $1800-$2100/month. The area has seen significant demand and growth over the past few years and is a prime area to capitalize on significant appreciation. With the seller financing, I would pay her the "mortgage", use my own money for the rehab and then the refi is open to few options. I could continue to pay her the "mortgage" and just refi the rehab as a mortgage. Doing this will give me $145k leftover to leave as equity, pull out for another deal/HELOC. The other option is to refi the seller financing and the rehab altogether.

1. Offer 1: Cash Offer
   Amount - $145,000
   Follows traditional financing (inspection, closing procedures, commissions, etc.)
   Offer 2: Seller Financing with no down payment (terms negotiable)
   Monthly payment to seller: $778.39
   Term: 30 years
   Interest: 5%
   Amount to be paid after 30 years (including interest): $280,000
   Lien Holder: Seller
   Tax burden is less, potentially no tax implications for seller
   Monthly payment paid to seller
   Willing to continue to pay estate if seller passes (AKA no refi on the seller financing)
   If monthly payment not made, house goes back to seller
   Commission will be paid to realtor
   Offer 3: Seller Financing with Down Payment (terms negotiable)
   Monthly Payment to Seller: $739.47
   Term: 30 years
   Interest: 5%
   Down Payment: $7,250 (Negotiable)
   Amount to be paid after 30 years (including interest): $273,459
   Lien Holder: Seller
   Tax burden is less, potentially no tax implications for seller
   Monthly payment to seller
   Chunk of money given upfront
   Willing to continue to pay estate if seller passes (AKA no refi on the seller financing)
   If monthly payment not made, house goes back to Joy
   Commission will be paid to realtor
   

The Dilemma:

How do I convince the seller this could be a win-win for both of us? How do I go about educating the seller? I do also understand at the end of the day the seller just may not want to do it. The property will cash flow positive with the seller financing options and cash offer. The cash offer is my least favorable offer because I don't have all that cash and she has higher cash options on the table. This would be my first deal if it works out. I am also working to use seller financing on another deal I am looking at. 

Any and all feedback would be greatly appreciated!