Seller financing balloon payment, need help structuring deal

[Reno Che]

My friend is selling their property, its a townhouse rental. It will be an off market deal and I was considering doing seller financing because then I wont need to put 15-20% down as i would from a bank. I am trying to out figure the best way to structure the deal. I have never done this before and I am looking for guidance on how it works. I was thinking I can give them a small down payment 5-10k then do a 7 year term at 6% and have the balloon payment due then. I am wondering how to value the property if I reach the end of the 7 year window, any advice would be greatly appreciated. Also is it easy to secure financing in situations like this from a bank or credit union.

[Frank Hinck]

@Reno Che

You set the purchase price now, buy the home at that value with the owner financing and the down payment. When the time to refinance comes, assuming you use traditional financing then a bank will order an appraisal for the new value.