Question on a Seller Loan Situation

[Gabriel Feghali]

Hi all - I'm trying to buy a place in Queens, NY. I'm co-buying with a partner and this will be an investment property that we'll rent out. The bank I normally work with says they can get us a loan for 25% down and 4.5% - 4.625% for 30 years fixed. The seller however said that he'd offer a 4% loan at 33% down (he didn't specify the duration of the loan, but should be fixed). I feel like maybe I can get him lower on the 33%. I'm meeting with him Sunday to discuss further.

I don't know if I'm being paranoid, but this seems fishy to me. Usually private loans tend to be higher than what banks are offering right? There are no brokers involved and his prior attempt to close this sale recently fell through, so he came to us before putting it back on the market - speed and efficiency will be important here. My guess is that he wants some money upfront (thus the downpayment) and to continue to get a decent % on an investment / the loan to us (given a savings account would pay him basically 0). Just feels weird because the cap rate is around 4.5% so he would presumably get more by just holding on to the place.

Anyone have any insight here as to whether this is a good deal or if we should just stick with the bank loan?

thanks all!

Gabe