First seller financing offer, help please

[Thant H.]

Hello all,

I found a free and clear seller (somewhat motivated) who is willing to do owner financing. I plan to buy and hold that property. I am going to take a look at the house soon and plan to offer him all cash offer (about 65%ARV-repairs) and a term offer (100% seller financing: $0 down with 0 to 4% interest rate). I plan to offer about 70-80% of market value for owner financing. Is it reasonable? I will have positive cash flow if I can I can negotiate lower purchase price and interest rate.

If there are not many repairs needed, what do you normally offer in a deal like this? Thanks for your time.

[Aaron Mazzrillo]

Here is the secret to seller financed deals - what's on the paper is not necessarily what they will put in their pocket. I sent out a batch of letters today to all the note holders whose properties I now own. My letter basically asks if they might be interested in a lump sum payment for all the payments due in 2015 in exchange for a "small discount" on the total due. I once paid off a $65K note for $25K and the guy drove over an hour to get the check from escrow. 

Once the idea of you being willing to put a little extra cash in their pocket, they'll suddenly start shopping with you in mind as the source of funds. Here is the exact letter I sent out this year:

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Dear _________,

I recently had a small note pay off and have come into a bit of ‘extra’ money. I’m not in a position to pay you off; however, if you’d like a lump sum payment for all of next year’s payments, I might consider it. What if I agree to pay you for 10 months, all upfront, and you give me credit for 12? I’ll make your January check in the amount of $5,729.

If you’re interested, just sign and fax or mail back the enclosed acceptance letter.

Thank you,

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2 months credit is over 16% return on my money. Even if they go for 15%, 10%, or one month which is just over 8%, it puts the idea in their head that you'll be willing to give them money in exchange for a discount and that is where the real profits lie in a seller financed deal.