Seller financing terms

[Zoran M.]

Hi all. I've never been involved in this sort of transaction and wanted to get the communities input. I am negotiating the purchase of a portfolio of 3 SFR Units in Cleveland, ohio. The seller has agreed to an upfront cash payment of 1/3 of the portfolio value with the balance being seller financed. Worth noting, the 1/3 down payment is being provided to me by a private lender, which I will need to repay within 6-9 months. A few questions: 1. What terms should I attempt to secure under seller financing? I was thinking 5 year maturity, 30 year amortization at 4%. Ballon payment at maturity. What protections should I include, if any? 2. What is my best avenue to repay both my private lender and ultimately the seller? 3 separate mortgages from a portfolio lender at 75% LTV? I am targeting to buy the properties at 70% of appraised value. Much appreciated!

[Bill Gulley]

Without dollar amounts it's impossible to advise, where does the one third come from within 9 months?

Who is going to be in first position the seller or your lender?

Have you checked with a portfolio lender as to seasoning requirements to refinance?

It might be better to buy with your private lender and buy them out with a future refi and payoff the seller, can't tell.

I suggest you check first on alternative financing and ensure you can obtain funds rather than speculate as to when you can meet the obligations created.

Note terms can have endless possibilities, it needs to work for both you and the seller.

Much has been written about financing concerns, I suggest you see your banker and/or a mortgage originator to guide you specifically so that things may be planned.

There is an old thread that has aspects that are applicable to your thoughts, not entirely but aspects, "What do you want Mr, Note Buyer" it's long, but there are gold nuggets in there you should understand. :)