Seller Financing: 0% Down Payment?

Question

Hello BP Community!

I am looking to purchase an investment property (duplex) and will be entering into discussions with the owner about a possible seller financing deal. I am willing to offer up to 20% above the asking price in lieu of making a 20% down payment.

Thoughts on this approach? Any sellers or buyers out there who have successfully closed on this type of deal?

Chris John · Answer

@Michael Keane

Nothing ventured, nothing gained, but I'd really question a seller that's willing to accept 20% over asking with no down payment and seller financing.  I can't think of one reason that you'd continue making payments if things go remotely south.  I'm sure you're a great guy with no plans of breaking the deal, but with those terms, why wouldn't you?

Michael Keane · Answer

Thanks, Elliott.

Eliott Elias · Answer

Why not? You never know the sellers motivation, what I have found is sellers are not educated enough on owner finance (especially if they have a loan on it) and the idea of it throws them off

Andrew Postell · Answer

@Michael Keane wow, you are willing to offer 20% over the value of a house in a declining market?  That sounds crazy.  I would be trying every OTHER strategy besides that right now but you can certainly do it if the seller understands what you are offering.  As mentioned above there are several things to the seller financing part....and to me, having a seller that has the ability to do what you are asking and then actually understands what you are asking will be very critical to it working.

Charles Carillo · Answer

@Michael Keane

In my experiences with seller financing; there are 3 main parts to the deal. Interest rate, down payment and price. You need to find out what is most important to them and edit the other 2 so that it works. For example; the interest rate (cashflow) might be most important to them; give them a higher rate and then offer a lower price and lower down payment. If the most important part for you (down payment) and them are the same; the deal will not work out.