Seller financing for portfolio deal

[Christopher Eckstorm]

Hello all,

So was looking through listings and found a duplex that seems good upfront and inquired further about it. After discussion was told owner was interested in working with investors and has more duplexes for a portfolio sale if I was interested as well as offering seller financing.

Just wanted some quick opinions on seller financing for multi unit rentals... pros, cons, personal experiences etc. Appreciate any input!

Best,

Chris

[Joseph Cacciapaglia]

If he is suggesting a balloon payment with the seller financing, be sure that you could comfortably qualify for conventional financing, with a large margin of error if you needed to. One thing I saw a ton of in the last downturn was investors that were stuck with balloons that they couldn't refinance. Many of these people lost properties that they had taken the time to reposition. I think at this point in the cycle, anything less than a 5 year term is pretty risky, unless it's relatively low leverage. This is also true if he's giving you a wrap, and there is a due on sale clause in it.