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Updated over 1 year ago on . Most recent reply
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questions on how to pitch different seller finance options.
Hello all. Im really excited to be here and start my ROI journey!
Yesterday toured a really unique property that im interested in buying in Colorado. Its on 2 parcels with a 3bd 3ba 4100sqft house. it has a man made pond on property as well as over 4000sqft of shop space between 2 large buildings. He lived there for 30 years and he owns the place outright but has not lived there in 4 years so the place is in need of some love both inside and out. Asking price is 500k but seems motivated. If he is willing to do 100% owner finance im comfortable paying the 500k and structuring a deal based off of that number. anything less and i will be offering between 435k-465k
Ideally i would like to use this as a STR once its back to its previous glory. but would not be opposed to flipping it if the numbers make sense.
We pitched owner finance and he was willing to listen but would not send his numbers he wanted a pitch. We don't know right now how much he is willing to finance so i i wrote up a few offers to send to him, can i please get some feedback on any and all of these schedules. 1 is a full owner finance, 2 is half, the others are interest only options, 1 for the full amount and another for financing the down payment. Im also considering asking if he would accept a 6 month up front payment as the down payment and start making payments in month 7 because the house will be under construction for 4-6 months minimum with no income.
I know there are a thousand different ways to structure seller finance and these were just the beginning of my thought process. Im still waiting to hear back from him as he's retired in the Philippines. Im fairly comfortable speaking confidently about the benefit or "win win" of seller finance but am nervous about offending him. He is represented by an agent as am I and we are discussing the possibility of direct contact but as of now we are going through the agents.
SO in short (long haha) should I be asking what HIS NEEDS ARE? how much a month or how much up front he needs and then structure a deal based on those figures or should i "pitch" any of these ideas and see if he bites?
100% FINANCE:Monthly payment-$2,994, Purchase price- $500,000, 10% down- $50,000, Owner carry- $450,000, 5 year Interest- $153,223.83, 7% Interest, 30 Year term, 5 year balloon (1-5 year extension based on market value and ability to refinance)
50% FINANCEMonthly payment- $1,580, Carry amount- $250,000, 5% Down- $12,500, Owner carry- $237,500, 5 year interest- $80,868, 7% interest 30 year term, 5 year balloon (1-5 year extension based on market value and ability to refinance)
INTEREST ONLY: DOWN PAYMENTMonthly payment- $500Purchase price- $100,00010% down- $10,000Owner carry- $90,0005 year Interest- $30,0005 year balloon- $90,000Total Payout-$130,000
Most Popular Reply

First, never wait for the seller to tell you what they want. You make the first move based on what works for you.
Second, never give the seller option. Make only one offer. By giving the seller multiple options, you're giving the seller the open window to take pieces of each offer, and frame them into a counter offer that you'll never accept. It's an open invitation for a bad negotiation. Make one offer. If the seller counters, then you counter back. You know what you're options are, but the seller doesn't need to. They'll just take the best (for them) pieces of each, and turn them into a bad deal for you.
I like your first option the best (100% financed), except the balloon shouldn't be less than 10 years, and you shouldn't be giving them full price. The shorter the balloon, the lower the interest rate...and the price. Remember this, the interest is added profit to the seller. When you give them 100% of the asking price, and add the interest to it, they are getting a lot more than what they are asking for. In your example, they would be getting almost $600k for the property. Along with that is the added tax benefits they get from not getting all their money in one lump sum.
The second option of 50% financed is a terrible option. The goal is the lowest DP possible here. 50% financed means you are paying a 50% DP. Ouch!!!
Keep in mind, this property is worthless to you until it is usable. That means added cost and time from both rehab cost and monthly payments to the seller. I would start by subtracting the cost of the rehab from your purchase price, then go with interest only payments for as long as you think you need to go until the property is usable. Then sell it.
Actually, buy it using an LLC as the buyer, then when you sell it, don't sell the property...sell the LLC. Way too many advantages to list here and explain doing it this way.