Seller Financing Valuations

[Brandon Bohland]

I'm having a hard time valuing seller financed deals. I've had a few come accross my plate, and I'm thinking I had it valued lower than I should have. I understand a couple good rules of thumb:

1. Cash Deal: ARV - 70% - Repairs = Purchase Price
2. Buy and Hold: I like to use 1 month rent x 50 = Purchase Price

These are probably for all cash deals. What if the seller agrees to do a land contract or 'subject-to' deal? Is there a rule of thumb on this?

Here is a quick example: There is a motivated seller who's house is worth $80k. He owes $63k and is willing to do a 'subject-to' deal. It probably needs $15k of repairs/reno. What kind of value should I add for the seller doing the financing assuming it's a 6.25%/30yr fixed. Or, in general, any good rule of thumb?

Thanks!