Are people overpaying for Subject 2 / Seller Financing Deals?

[Cassidy Burns]

Hi BP,

I was meeting with a potential lead yesterday and was discussing how I was going to purchase his portfolio.  I think we made good traction and will be able to make it work for the both of us, HOPEFULLY.  That being said, he was telling me that 2 years ago (September 2018) he sold/ seller financed 130 units of his portfolio to a larger investor, who I actually know.  

The price per door that they paid was probably $15,000-$20,000 more/door that any other units in the area are / should be trading.  

So my question to you: 

Are people overpaying for seller financing for 2-5 years of very good cash flow? But what is the exit strategy if in 2-5 years the market has changed, you have to finance the property with regular financing, and you are already "overpaying"? 

-Interest rates could increase

-Cap Rates could increase

-Lending could tighten

Curious to what you are seeing and maybe I'm wrong on my assumption, that it is actually better to have those 2-5 years of great cash flow to stabilize and value add.

Cheers,