Need advice on an seller finance offer

[Dean Suzuki]

Hi,

I am selling 2 four-plexes .  I got an offer but was asked for seller financing.  I have never done a seller financing deal before.  So, if the BP community can help me and share any advice/wisdom/gotchas to avoid.

The numbers are:

• I am selling each fourplex for ~$200K .
• I owe about 85K on one of them and on the other one, I own free and clear.   My bank will not allow wrap mortgage so I will have to pay off this loan.
• I believe that closing costs will be about $28K (6% comm + closing costs)

My realtor mentioned that the buyer is willing to purchase for 25% down.

I am thinking that the variables are:  purchase price, % down, loan term, and interest rate.

I would like not to have to put any money in to close so I am thinking that I should ask for at least $115K down ($85K mortgage payoff + 28K closing + 2K buffer).

My realtor mentioned that a typical interest rate would be between 8-12% and recommended 9.5% on a 30 year amortization and I could request a 3-5 year term.

My questions are:

• On the purchase price, should I push for a full purchase price since I am accepting the seller financing.
• What loan term should I push for?  3 years, 4 years, 5 years or longer?
• What interest rate should I push for?   Is 9.5% about right?  Too low?  Too high?

My motivation for selling the fourplexes is to re-invest the capital into another investment.  So, this is not an ideal offer but its interesting.  I am also looking at it as great learning opportunity.

I welcome any advice.

Thanks,

Dean