Seller Financing - A new twist on something I've heard before

[Josh Calcanis]

BP,

I just moved back to Florida from Seattle and one of the priorities was to find another REIA. I found CFRI and attended their general member meeting today. The speaker was going through a couple of methods of creative financing and one that really caught my attention was a form of seller financing.

Essentially he'd pay 0% interest, but 'overpay' on the purchase price. The example he gave was purchasing a mutli-unit complex in Florida that had been on the market for 121 days. Wasn't in horrible shape and could really be rented out immediately. It was priced at $740,000 and was tenants were not paying market rent. He offered $740,000, but with some unique terms. He'd pay $70k as a DP, then pay $5,000 a month over 10 years with a balloon payment of $70k at the end of the contract. His reasoning on over paying was essentially avoiding interest and creating another 20 years (ideal world we leave a 30 year mortgage to amortize) of free and clear cash flow. The property cash flowed $8000 a month.

Sadly, he didn't take questions, so I'm bringing this here...

1. For seller financing, doesn't the property need to be owned outright? No financing involved?
2. Where do you learn how to write up terms like this or is that a question for an attorney?

3. Is there a way to find out if a property is owned free and clear?