What are terms for a typical second note/seller financing?

[Dan K.]

Hey BP!

I'm hoping to acquire a few more rental properties quickly, and began reaching out to a few owners of larger buildings who may be willing to help with seller financing.

I was hoping to find a seller that is willing to carry a second note - I finance 75% with a traditional commercial mortgage, and the seller lends the final 25% as a second note.

I know that that pool of sellers that may want to do this is small, but hey - I figure it never hurts to ask.

What kind of terms are typical when asking a seller for a second note?  Is this typically a shorter term loan where I would need to refinance or pay this off in a few years? What is a good length of time to propose?

Thanks BP'ers!

Dan

[Tom S.]

@Dan K.

 - I have two 2nd mortgages where I did exactly what you're proposing, and I'm paying 7%.  Note however I had to have the 25% up front, and then essentially got reimbursed those funds at closing.  Finally, even with good credit, the bank still wouldn't allow 25% for the 2nd mortgage - they would only allow 15%.  

Hope that helps,

Tom