Owner finance or not. If owner finance (advice welcome)

Investor · Albany, NY (albany ny) · Member since 2017 · 7 posts · 0 votes

I am walking a 4 unit apartment building next week. I can qualify for a bank loan (local CU) with current offerings (15% down; 20y amortization; 6.5% interest). The other option is owner finance (owner is open to it).

Purchase price (what I am thinking based on area and other properties) = ~$335k

Monthly rents = 4150$

Taxes = $9570

Insurance = $1950

Water & Sewer = $925

Should I finance via bank. If owner finance is an option, what can be a good offer? Thank you.

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Joe VilleneuvePro Member

Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes

Go for better terms with seller financing. If not better terms, then go with bank.

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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
3y
Quote from @Elvis Nasi:

I am walking a 4 unit apartment building next week. I can qualify for a bank loan (local CU) with current offerings (15% down; 20y amortization; 6.5% interest). The other option is owner finance (owner is open to it).
Purchase price (what I am thinking based on area and other properties) = ~$335k
Monthly rents = 4150$
Taxes = $9570
Insurance = $1950
Water & Sewer = $925
Should I finance via bank. If owner finance is an option, what can be a good offer? Thank you.

Get the bank financing - it will be reported on your credit which you want and build a relationship with that lender.
unless the seller does 0% down or a stupid low interest rate, otherwise go with conventional financing.
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Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
3y
Go for better terms with seller financing. If not better terms, then go with bank.
1 Reply
Doug SmithPro Member
Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes
3y
Man, unless you can get incredible terms from the seller, jump on that bank deal. That's really good. The only concern I would have with the bank financing is that the 20 year term might make it more difficult to cash flow the property, but that LTV and rate are pretty great. I certainly would struggle to match it.
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Spencer Hibdon
Member since 2023 · 2 posts · 0 votes
3y
You should choose whatever has the best rate. That will make you the most money in the long run.
Also, not sure if I’m allowed to do this but, I’m a lender and can match any rate you find and get you the truly lowest rate available. And we can close in as quick as 7 days. Let me know if you are interested.
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Doug SmithPro Member
Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes
3y
If the bank is an option, I would go that route. It seems everyone is trying to get too cute and pushing owner financing first most of the time now. If the owner is going to get all of their cash at closing, they will tend to be more aggressive on the price. That deal you are describing is something that I, as a lender, can not touch. That's a good deal. That being said, you posted this a month ago, so we'll have to see what their rates are today. Good luck to you!
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Steve Vaughan
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
3y
If you will own it (vs a LC or CFD) I'll always go with SF if comparable.

Bank financing costs at least $5k, isn't a sure thing to close and burdens your DTI and available credit.

All sellers will accept paid in full. Few will accept decent to you SF. Take advantage when you find one.
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