Is this deal structure appealing to the seller for owner finance?

Question

The property is a condo ARV is $58-66K.

Seller is willing to consider owner finance and this is what I offered:

sale price is $50K, no downpayment

monthly payment of $400/mo for 5 year

$36K balloon payment at year 5.

Or sale price $50K

downpay $3000

monthly payment of $400/mo for 5 year

$32K balloon payment at year 5.

My exit strategy is to rent it for 5 years for a cash flow of $300/mo.

Is this deal structure appealing to the seller?

Any suggestions?

Ellis San Jose · Answer

@Eve W.

An offer that is appealing to one seller is an extremely individual situation based on their circumstances and desires.

There isn't a universal structure that will have overall appeal.

The key is to keep making offers crafted from what the seller gives you in your conversations that ultimately make sense for you as an investor.

Eve W. · Answer

the seller is out of state landlord, owns the property free and clear. He is tired of managing the property from long distance anymore.

I based 400/mo is 50k 5.5% interest.

Wayne Brooks · Answer

From the seller point of view, no...no skin in the game. What interest rate/amortization are those payments/pay off based on, or are they just random numbers?

Brian Ortins · Answer

In my experience, many owners that offer seller financing want to offer a second mortgage to help with the downpayment, and ensure that financing is secured. Does the seller own the condo, or is there a mortgage attached? Is the seller in a distressed situation where he/she needs the money immediately?

Is this deal structure appealing to the seller for owner finance?

Is this deal structure appealing to the seller for owner finance?

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