1st Owner Finance Deal- is 5% 20 yr am, 10 yr balloon good?

[Jack Tucker]

 OK... been doing lots of cash deals, but never have bought an owner finance deal.

I have found a quad at a good price.

He prefers to owner-finance the deal for $75k at 5% fixed interest, 20 year am with a balloon at 10 years in the amount of $46,666.14.  

First question... is this a good set of terms?  It sounds competitive with my banks.

Second question... This thing gets gross rent at $1620 with upside on market rent. Quick math says approx $645 PITI.

[Bob E.]

@Jack Tucker  One important thing to add to the contract, ask the seller for a right of first refusal if he decides to sell the loan.  

Often times a seller will decide that they would rather have the cash and look to sell the note at a discount.  If you seller does that you want to at least have the right to try and round up financing to buy out your loan at a discount.  Another scenario where this might come up is if you have a seller that dies and the family / estate wants to liquidate the note.  If they decided to sell your note with a 50k balance for 30k you want to have first shot at buying at that price.

No reason your buyer should feel threatened by this, just tell them that, should they decide to sell the loan you would like to be first in line with a chance to buy it.