Great question! Seller financing can be a fantastic tool, especially for multifamily deals, and I’ve had a lot of success using this strategy. Instead of just focusing on a seller carry-back for the down payment, I often go a step further and ask the seller to finance the entire property. There’s a major advantage here, especially for the seller, as it can help them defer capital gains taxes. This way, they can continue to receive steady monthly income without the headaches and responsibilities of managing the property themselves.
Of course, I always recommend sellers consult with their accountant to fully understand the tax benefits, but many I’ve worked with have found this to be an appealing option. As a buyer, I’m usually willing to pay a bit more for the property in exchange for favorable terms—like a low interest rate, often between 0-3%. This creates a win-win situation.
As for your equity partner question, the key is to present the deal in a way that highlights the security and long-term benefits for them. If you have the seller willing to finance at a low interest rate, you may find it easier to attract an equity partner since the property is already structured to generate solid cash flow. Ideally, you could negotiate with the seller to carry a first-position note instead of second, or even offer them a higher price to make this work. It’s all about finding a balance that works for everyone involved.
Regarding closing with short-term private money, it’s an option, but you’d want to weigh the costs and ensure that it doesn’t eat into your profits too much. If you can negotiate directly with the seller to finance the entire deal, you can avoid that step and secure more favorable terms from the beginning.
Feel free to reach out if you’d like to dive deeper into this, as it’s a strategy I’ve used many times to create successful outcomes for both buyers and sellers in multifamily investments.
