Possible seller financing pitch

[Dustin Figenscher]

Hey guys & gals, As you see I haven't posted much on the BiggerPockets forum, however I have been very active in reading posts and soaking up knowledge in the past year since I bought my duplex. I have recently been very active in forming my new next investment strategy and I have concluded that a single-family rental followed by a live in flip would be my best option to propel my portfolio and investment funds. As they say, when it rains it pours, but it's pouring opportunity on me right now. I have been in the process of finding hard money lenders for a very nice foreclosure property in my hometown that would be a great potential first-flip. In the midst of this, I ran into an acquaintance that now carries the responsibility of their late father's home. It is in a quiet neighborhood, and is a three bedroom two bath home. They are motivated to sell and are not interested in the trouble of realtors and prepping the house for a sale, adding the downfall of trying to sell right before winter in upstate NY. When I called to pitch my offer of seller financing I was very nervous, but I at least got them to consider, retrieved their email, and said I would email them four different offers/terms, and if they wanted to entertain any of them to reach back out to me. The problem I'm running into is creating offers that are obviously to my advantage, but likable; As opposed to selling conventionally. The initial offer I have in my head is as follows: 0-10% down 8% interest 5 year hold Then refi. I know it's not very complex, but I don't want to confuse myself yet, haha, I just want to create a successful, appealing, seller finance offer. This property will be a rental property which rent averages in the area are around $1200/mo. Knowing the area and the condition of the property I believe it to be worth around 70-$75,000. I would love to hear everyone's feedback on possible offers that are appealing to sellers that are on the fence as well as things I could say to enhance the opportunity. And of course, any questions I will reply back ASAP.

[Shane Odom]

Good luck with this deal!! I had a couple of questions.  Will the payments be interest only, perhaps with a balloon payment?  I worked a similar deal with $5K down, 6.25% interest on a 30 yr amortization.  Interest only the first 18 months, will balance due at 60 months.  It was a deal where I didn't have a lot of money at the beginning and the sellers just wanted to be rid of the property.  The interest only payments allowed me to cash flow more at the beginning and put that money into doing some of the rehab work. Afterwards, I was able to refinance out quickly with very little of my own money, and help them out while giving them some cash flow for awhile and taking it off of their hands quickly.  I think you are on the right track with your initial offer, just make sure you have some "backup" ideas to help out the seller.