Buying Property Through Sellers Finance

[Matthew Cohen]

Hello All, I am looking to acquire my first two rental properties at once. One will be through conventional mortgage and I would like to set up the second financing through a Sellers Finance deal. I've looked into the structure of a Sellers Finance Deal and watched a few videos but I'm not sure my calculations are exactly correct. 

Is there anyone out here that can help me out? What options do I have to pay the seller back within a designated time-frame? What is the best way calculate a good deal through seller financing? 

Thank you all! 

Matthew 

[Lee Gierszewski]

The best part about using the seller as your financier is you can make up the terms however you want. I would suggest having a lawyer draw up the legal paperwork once you agree on terms (at least for the 1st deal). Here's what I did for my 1st seller finance.

The seller has owned the property since 1948. Small single family home, approximate value $100,000. He wanted to sell it outright but I basically told him I didn't have the cash available currently because I just bought the triplex next to his single family home. I then asked if he'd consider being my bank. I explained  how I could buy his place for $85,000 and give him a down payment of $10,000 & pay him monthly for the next three years. We ended up agreeing to a 30 month Contract for deed. I pay him $700/mo and he has basically nothing to do with the property. I pay taxes, insurance and handle all the property management. He truly gets mailbox money and it spreads out his tax hit over 3 years instead of all in one year.

The best part for me in the deal is the $700/month I pay him, $650 goes to principal buydown and he gets $50 month in interest. You'll never find that kind of prinicpal buydown from a bank. At the end of the CFD I'll have to pay him just over $53,000 to buy the property outright.

I also have it rented currently for $1200/mo.