Las Vegas, NV · Member since 2016 · 62 posts · 28 votes
I'm currently about to submit an LOI on a property, and want to include seller financing as part of the deal. I plan on asking for 10% of the down payment(the remaining 15% of the 25% down payment would be made by me)at a 5% interest rate, 7yr term, 25 yr am. The only problem is, this severely affects cash flow and the returns.(even though you're required to bring less money to the table) I've always heard that seller financing is like the holy grail, but unless I'm missing something, it seems like you'd need a deal that's a big home run for it to work!?
Am I overlooking something, or is just a case of I will need a better deal for seller financing to work?
Developer · Houston, TX · Member since 2015 · 1k+ posts · 1k+ votes
9y
A seller finance deal won't save a bad deal. It might push an okay deal over the hump. And it will juice a good deal to make it great.
Seller finance will get you better returns because you're using more leverage but that will always affect cash flow. If you're looking for cash flow then you'll have to put more down or find a better deal.
Philadelphia, PA · Member since 2016 · 73 posts · 28 votes
9y
The source of your financing doesn't change the numbers. The benefit of seller financing is usually in the form of more flexible terms that allow for lower down payment, lower credit scores, flexible repayment, etc. Just because a seller finances a property doesn't mean it will be a good, or even profitable, deal.