Seller just wants to finance.

[Jason Patterson]

Ok about to make a offer on a very clean rental house that has been rented for 25 years by same renters. Owner doesn't want to sell out right because they don't want to show a big capital gain. They are interested in seller financing though.

Our offer is going to be 90k with 15% down @ 4% interest. In need of small repairs around 5 to 7k homes sold in the area range from 135k to 150k same year, sq/ft, 3/2, two car garages, rural neighbor. Comps are on same street with in 3 months. We are going to rent it out for 1,400 a mth time being. Cash flow looks good all numbers come out great.

My question is what happens if someone wants to buy it from us?
Do we make a contract up saying no penalty for early pay off?
How does this effect the purpose of seller financing for the seller if we where able to sell it for a larger profit?
So in the end seller would still get a large capital gain when we sold it to pay them off.

If we are 100k into the house and can sell it for 145k You Bet Its SOLD!
I just don't know how seller financing works on such terms like this.

Any help would be appreciated.

[Account Closed]

Originally posted by Mary B.:

Why can't you just continue to make monthly payments to your seller after you get your $45K profit, imo? If you really want to help the seller not get a big payout than continue to make monthly payments for a year or two(whatever you negotiate) and then pay the rest in full. If not just do the monthly payments for the full term of the agreement whether its 3yrs or whathaveyou.

Kudos,
Mary

This suggestion didn't make sense to me. If the OP sells the property to a retail buyer, his buyer's lender will not let him keep the note open. The note and all other liens would have to be paid at closing. It's the seller's job to make sure they create a note that works for their purposes. It's not the OP's job to help them avoid capital gains. What am I missing?