1st Seller finance duplex

[Paul Sassin]

Have an off market duplex opportunity. Traditional financing on it doesn’t make sense. Not enough per door cash flow.

However, The seller is dumping 5 or so properties as he is “retirement age”. I just want 1 of the 5 properties. I think seller finance could make sense here since he could lower his capital gains.

He was cash flowing around $750 per month on the house. I would like to offer him a 10 percent downpayment, about 15k and a similar monthly payment per month over 4 years.

2 big questions for me right now.

1. How much interest I should pay him?

2. The real estate agent involved is the selling and buying agent for us. How much should he be compensated?

Any advise is appreciated.

Thank you all!!

Paul

[Cassi Justiz]

My husband and I did an MLS deal on a seller financed duplex. This seller wanted to minimize his gains over a long term, so we did a 25 year note. We offered several different scenarios that worked for us and allowed the seller to pick the one that was most beneficial for his situation.

We settled on 10% down, 5% interest, 25 year note. I don't remember what the other variations we offered, but basically we tweaked down payment, interest and note terms on each offer. It kept our monthly payment/cashflow about the same, but just changed the total payoff amounts on the seller side. If I were you, I would try to do al longer note if the seller is agreeable to it. 

As far as the agent compensation, I would ask them what they expect. Some agents will discount their compensation when working both sides of a transaction and other agents will not. If you brought the deal to them and are just asking for help with the transaction piece, you may be able to work out a lower rate. 

Good luck!