Sellier Finance/ Short term rental

[Greg Strunak]

Hello, new to the bigger pockets forums. I'm looking to make my first short term rental deal using seller finance. I was able to find some sellers offering some deals with seller finance. I was hoping to get some good insight on how to negotiate these deals to make this a good deal for myself. One seller is offering :

$10,000-$15,000 Down, 12% Interest, 15-Year Term, 15-Year Amortization, 10-Year Prepayment Penalty, Can Sell with Assumption of Loan (After a Certain Number of Years Owned) in Reduction of Years) The price of the unit is at the high end of the market as well.

The other seller is offering:


(25% Down, 9% Interest, 3-Year Term, Interest Only, Willing to Amortize, 1 Point at Closing on Loan Amount. Also asking for a high end price for the unit.

I would love some insight on how to negotiate these deals to make a good deal for myself as well as the seller. I will also add these are vacation  rentals, short term rentals. IM ALL EARS 

[Andrew Steffens]

Are you pursuing seller financing because you do not qualify for traditional financing? Have you looked at all options including DSCR, hard money?

Seller Financing can be great but the numbers will tell you whether you should do it.  Will the properties cash flow at those terms?

[Nathan M kiefer]

The only time we have done a small seller finance we did 50k 4% on a 3 year. We only did it because there was a gap in cash we had and we didn't want to beat them up on price because it was a private negotiated deal that was 200k under market.

bpttom line is go low on rate and extend term out as long as you can and work back from there. Worst they can say is no

[Sarah Kensinger]

In order to get a win-win situation the buyer gets price or terms and the same goes for the seller. It's nice to see what works for everyone, but you'll probably need to run numbers on the unit and see what you can do according to revenue the property would pull in. Then negotiate off what you can do. One thing I thought of...three years is not a lot of time to build up equity for a nice refi when the loan is due.

[Zach Edelman]

Very curious why you'd go the seller financing route here when these terms are respectively worse than what you could get from the non-conventional space. For DSCR right now, you can get 20% down debt with rates in the 8's on 30 yr fixed, fully amortizing debt. Is there a specific reason why you're seeking seller financing here?