Seller Financing vs Getting A Loan From The Bank

[Cody Cross]

I have a deal under contract currently for $130,000. It's a tri-plex in Louisiana. I'm in contact with a local commercial bank and the seller is willing to finance the deal at 8% on 15 years or I can get a loan from the bank for most likely 5% 15 years.

The property is in a flood zone. Flood insurance after raising the small structure will only be $1,800/year.

Both will require 20% down most likely. But, what if I could convince the owner to let me do the deal with 15% down? What are your thoughts? Thanks!

Property currently cash flows 1,450. Has potential for 2,650 very quickly.

[Cameron Tope]

Cody,

Anytime the seller will provide solid financing terms that's ideal because that loan will not count as one of your 10 Fannie/Freddie loans. 

However, if the seller financing terms are worse than your local bank (higher interest rate and/or down payment) then why would you go with the seller financing? 

The only times I've used seller financing is when the down payment has been low (less than 10%) and/or the interest has been lower than what I could get at a bank. 

Hope that helps!