Owner willing to finance sizeable chunk! ADVICE!! - Posted by Blue Heron

Posted by Tony in CT on May 26, 2006 at 15:22:19:

First, Blue Heron, I am a new investor but no one else has responded so I’ll throw out my 2 cents. There is an article on this site that is titled something like “You Name The Price, I Name The Terms”. Check that out. If he would take a note back for a number of years at an interest rate less than you can get on a mortgage you can pay more for the property.

Because he can offer you a lower interest rate than your lender, it would make sense for you to have him take back as much of the purchase price as possible. From the one quote you used it sounds to me like he is more concerned with term and price than percentage of the purchase price he finances or interest rate. I would ask him what is the least amount of money he needs up front. Get a mortgage for that amount and then get him to loan you the rest at a really low interest rate (maybe he’ll do next to zero?) for as close to 5 years as possible.

Be sure that at the end of his note, you will have enough equity in the place to either refinance or enough cash to pay him off.

I think you need to feel him out more as far as term, rate and the percentage he will finance. Hopefully others will offer more advice before Tuesday!

Tony in CT

Owner willing to finance sizeable chunk! ADVICE!! - Posted by Blue Heron

Posted by Blue Heron on May 25, 2006 at 12:44:40:

I came across the owner of a Craftsman Bungalow which has been converted into 3 separate units. Drove by it. Lots of potential in a great neighborhood. About 5 days after our initial conversation, I left him a voicemail saying I was sorry but I couldn’t make the numbers work. He’s asking $450k. He called me back and ultimately said “when we bought the place, the seller took back paper for five years, (that’s pretty good, right?) but we couldn’t do that much” Which meant to me that they’d take back some but not all. I haven’t heard back Comps from my agent friend, but its Stricktly FSBO per him. but I don’t know A) how low he’ll go, B) the best way for me to structure this deal for myself both over the long and short term, or C) How little would I need to qualify for. I told him I’d get back to him no later than next Tuesday.
Any advice would be most appreciated.
Thank you in advance.
Blue Heron