HOW TO STRUCTURE SELLER FINANCED DEALS JIM INGERSOLL
1.
½ now and ½ in 6 years: For this example
lets assume you are buying a house for
$60,000 that you would love to hold as a rental
property.
This offer would give the seller
$30,000 at closing and then the final payment
of $30,000 in six years. As the buyer, what did
you accomplish with this structure?
I hope
you see that it is equivalent to a zero interest
loan for five years. This offer can appeal to
sellers who need some money now, but do not
really need all of the money right now.
2.
Down payment exchange:
If a seller is
insistent on not providing you with seller
financing without a down payment, you may
down payment where you agree to repair the roof
be able to exchange the down payment for
or fix the air conditioning in exchange for his down
work needed on the house.
payment requirements.
Many houses
purchased from motivated sellers will require
something to be fixed. Sometimes it is the air
3.
No payments for 6 months: Wouldn’t it be
conditioning; other times it could be a roof.
nice to have no mortgage payments for the first
Instead of paying cash as a down payment
six months that you own a house? Why not
and then paying cash for the needed repairs,
negotiate that right into the purchase of the
structure your seller financing with a down
home with seller financing? If the seller insists
payment exchange. Agree to a non-cash
on a large down payment maybe you can just
pre-pay the first six mortgage payments to get
him some cash at closing and then enjoy
Understand that
you have a solution
to your seller’s situation
and the key
is to find a solution
that works
for both of you
having no payments for the next six months.
If you are buying a vacation home that you plan to
rent out when not using it yourself, you could also
ask to take one month per year off. For example, if
you are buying a beach home in the Outer Banks of
North Carolina, it may be tough to rent it in January.
If you are negotiating seller financing on your
beach house, ask the seller if you can skip the
payment every year in January. That will eliminate
that months’ negative cash flow.