Seller 20% carry on a rental property deal

[Ryan Shannon]

I just purchased a property from homeowner who told me they have another home that they’re willing to sell me. The seller offered to carry 20% so I can borrow 80% from a bank, but I have called several banks without luck.

 The property needs some work but already has a tenant in place (paying $1,250) who has lived there for years and isn’t planning on going anywhere so can’t do major renovations to increase the value.  I can buy the home for $100,000, “as is” it is worth $125 - $130,000, so it’s a decent long term deal.

Any ideas?

[Tom S.]

@Ryan Shannon  Yes, conventional lenders generally won't allow this, at least at closing.  Ideally if you can get the 20% and close, then execute the seller financed 2nd which will reimburse you the 20% downpayment.

I successfully done this, typically using a 401k loan for the downpayment.  We close, I get the 20% back with the seller financing, and then pay back the 401k loan, all for only a $100 admin fee on the loan.