Investor wants me to owner finance but I only own 1 property.

[Mark Fitzpatrick]

Let me start with my story/information.

I lived in Myrtle Beach where I bought a condo for 79,000 in 2014. I currently owe 45,000 on it. I moved to Charleston Mount Pleasant area in 2017. I make an average salary of 50,000. So my investment strategy is to buy a unit and live in it until I can afford to buy another. Then rent out the unit I was living in. I own the unit I live in now but have not saved enough to buy another unit yet.

The unit in Myrtle Beach I own has appreciated to about 160,000 to 180,000. I came up with the plan to sell that unit then use that money to buy a unit in the Charleston Mount Pleasant area and rent the unit I live in now. My unit in Myrtle is about 1.5 hours away. Having two units closer together would be nice for me to be able to check on them easier. My thought was to sell the unit while the market was high then reinvest it. The townhome range I would be purchasing would be in the 400k range with a 300k mortgage after the down payment I'd get from the sale of my other unit. My wife and I could afford a 300k mortgage comfortably but not easily. 

I gave the tenant a 60 day notice. She had trouble finding a place so I gave her another 30 days. Which is the end of this month April. Her boss called me saying she would buy the unit and keep the tenant in the unit. She explained that she wanted me to do owner financing and would email me the details.

I am still in the beginning phase of my slow build up to owning multiple properties. I've always known it would take me many years with the income I earn to own multiple units. Working hard on raising my income! 

Should I consider this offer that I have received? My feelings - Feels weird to be doing owner financing when I am still a newbie investor. Wondering if I'm getting taken advantage of somehow. Or maybe she is doing it for her own reasons, like she wants to keep the tenant there. I'm scared the market will crash before the balloon payment and she will walk away and make me foreclose on the unit. If the value drops below say 100k and I have to take the unit back I could have lost out on selling high. Say If I sell now and make 100k. But make 30k from selling the unit with the below deal then have to take the unit back I might lose money. Idk I've talked myself in circles. 

Here is the offer I received.

179,000.00 offer price - you would save 6-8 percent not having to give money to the real estate agent.
10 % down is 17,900.00
Interest rate of 4.5%
I would like to do monthly payments at a 10 year amortization schedule, but pay off in 4 years with a balloon payment at end of the 4 years, this would also spread your money a little a longer. That way you would not have the massive capital gains.
I typically use attorney Scott (didn't want to post his name) here in Myrtle Beach, but we can use whoever if you are interested.
I would be responsible for all taxes, insurance etc. It would basically be like you were the mortgage company.

 

[Dan Weber]

@Mark Fitzpatrick I agree with all of the other responses, but especially Wayne's. Putting the poor proposed terms aside, based on what you stated your goals are, the idea of seller financing doesn't fit those goals whatsoever. I wouldn't even bother being tempted by it. I would stick to your plan - sell it on the market and move on.