0% Interest on owner Financing?!?!?!?!

[Justin Hannah]

So recently i have been contacting owners directly in one of my markets, Boise area (whole treasure valley), i have been targeting small multi family 5-24 units.  the thing about this market, like many others now is the fact the the prices are super high and it is difficult to find good deals.  so what i started doing is running numbers three different ways... 

1. the price i can pay with conventional financing, like 25% down 4-5% interest 25yr am ect.  this price is always the lowest. 

2. i run the numbers with owner financing with 10% down 30yr am 10 yr term with 3-4% interest.  this price is a little higher

and 

3. owner financing with 10% down 30yr am 10yr pay BUT with 0% interest.  this price is always way higher so it catches the owners attention way more.  

i think i heard this on one episode and am wondering what you all think about this strategy??

the benefit for the owner is they get the interest up front in the form of higher price and there is also tax advantages with interest income taxed at ordinary income rate as opposed to principal pay down taxed at capital gains rates.

so what am i missing??? i don't really see the down side of offering above market value for a property if i am paying no interest and my cash on cash is high. as long as i plan to keep for a long period.

ENLIGHTEN ME ;) THANKS

[Jay Hinrichs]

seller though has to pay imputed interest..  so when they talk to their accountant and they get those facts could make it less attractive.. not sure what imputed interest rate is today but suspect about 3 to 4%  so they have to pay tax like they were getting 3 to 4% interest even though they are not..  I do quite a bit of Zero interest owner carry on my properties that I sell to investors. so very familiar with this aspect.  I don't dig into the numbers I just know I have to pay it.  what ever my account does.. in that 12 inch thick stack of returns  LOL