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