Seller Financing - 20% down or have owner carry 15% Second Note?

[Daniel Dietz]

Hello All, 

We are working our way towards a deal that will consist of 9 properties and 16 units with a value of about 1.25M. The owner is open to doing some form of Seller Financing on this deal. As I have been digging into understanding portfolio loans, I have come up with the following question, from both the buyers perspective and sellers perspective.

Let's assume the two scenarios are either 1) Seller with sell with a 20% down payment, amortized over 30 years @ 5% with a balloon at 5 years. Buyers need to come with 20% down (this would stretch us a bit thin) or option 2) Get a commercial portfolio loan at 75% LTV, bring 10% down, and have the seller carry a 15% note as a second.

We have a very strong relationship with the seller and have excellent credit and about 15 units owned between us right now, so experience also.

What are the risks/benefits to both the buyer and seller in each of these examples?

I am sure I left out lots of needed info so please just ask away!

Thanks, Dan Dietz