All Forum Posts by: Edward Stephens

No it's straight P&I on 20 yr amortization, 5 yr balloon. Its a good deal so there was no reason to make it more complicated plus property cash flows anyhow so I might as well start paying down principle. He laughs when I drop a check off because every payment has been more than the note. Increased payment may not be the best decision on my part purely from a financial standpoint but it's how I prefer to operate. Once the property is fully renovated, thus increasing revenue the monthly payments will not increase and at that point I will begin saving the increased NOI for the next purchase.

@Edward Stephens I think many sellers would be open to carrying a 2nd...IF (and this is a big IF) they trust the operator of the property.

I know great operators that I would loan 125% LTV on property. Some people just know how to manage property well and have shown a history of being trustworthy.

If you're not a great operator yet, what are the chances you could get one on board in exchange for some equity?

I've done it 5 times over the past 3 years. The key is to ask and show them the numbers. Many sellers don't want seller financing, because they don't understand it. Show them the amortization schedule and explain to them in writing what the terms are and how they benefit. 

I closed on a 44 unit apartment complex Feb 1 this year with seller financing, and the seller is the president of a local chain of banks.  Traditional financing was available but I decided to save it for another deal.  Seller required a sizable down payment, with 6% interest rate and 5 year balloon.  Terms could have been better but it cash flows from day one and will be a great deal after renovating the property.  At the end of 5 years I would not be surprised if the seller decides to continue carrying the note.  All I did was ask and the seller obliged.  

@Edward Stephens Never say never. If you find the right seller who does not want to go through the hassle to list or does not want huge tax burdens. This could also be a short term solution for a seller to look for another property to 1031 the proceeds into. It's all about finding the right seller and giving them the right reason to do it.

Best of luck!