I am thinking about seller financing 3 duplex units to a buyer. He is offering 25% down and wanting 5% interest for 30 years. Anyone have any suggestions when it comes to seller financing? Anyone from AL have any suggestions on who I should close with?

5% for 30 years is too low of an interest rate for seller financing IMO.

I wouldn't carry paper for 30 years. Five years would be too long for me. I'd only carry for a couple of years to give the buyer a chance to straighten up his finances to qualify for a commercial mortgage

Seller finance should be above bank rate and I think commercial mortgage are already above 5%.

I would be wanting the very tip top of market price to be willing to carry paper. Maybe even above fair market value.

Wix, selling and carrying the paper can be a great strategy. The 5.5% rate today doesn't sound bad; but locking it in for 30 years sounds a little too generous at this time. The reality is that he is unlikely to make payments for 30 years (sale, re-fi). I would include a clause to reset rates(tied to libor or fed funds rate) at pre agreed to intervals.

Screen this guy, find out his motivations. Too much debt at his bank? Something else? Is he a good operator? or is this a money laundry?

Good morning,

I am glad to read this discussion.

I offer the FSBO and owner financing, the motive I have is because too big the capital gain and not big enough to do a 1031 exchange (the current one is too higher price.)

So, instead of being a landlord, I will be a mortgage company. So far, those "investors" gave such a schedule, and don't tell me, the interest rate, and not even a downpayment.

(too bad, they only think they can easily ripped me off, do not know that I do know the number, and there is no "guaranty" when they take the title and the deed of my property.

So, my idea actually the rent amount and the monthly mortgage is about the same, the mortgage even includes the property tax and insurance. Yes, I will do 5 years ARM. I am too old to give a 30 years, not even 15 years.

However, I do learn that if the monthly payment not receive on time, it will take a year to foreclose the property, not like an eviction within a few weeks.

Yes, this is my own idea, but I have no one to discuss the feasibility. I would prefer monthly income instead of lump sum.

First you must add a clause, if the loan is repaid within the first 10 years, you want six month un-earned interest as a pre-payment penalty.

Second, you want the buyer to obtain a simple life insurance policy for the amount of the loan, making you beneficiary in case of death. Once paid, you will issue debt/mortgage paid in full. You want the insurance to last as long as you carry the loan.

Third, you want the buyer to carry fire, liability, earthquake and flood insurance having you as the mortgage holder and all payouts will have your name also on the check.

Forth, you need to run your buyers credit report, like he was a applicant to rent an apartment.

Fifth, you want to see a bank statement, income statement and a list of other properties.

When I in negotiations to buy a large apartment complex from a 83 year old seller that needed to carry the mortgage to avoid paying all of the taxes upon sale, this was going to be an installment sale -- they wanted all of my financials.

What would the monthly payment be? Suppose, for argument's sake, it was $300/mo for 30 years. What's the buying power of $300 in 2018, vs the buying power of $300 in 2048? Look at what the buying power of $300 was 1988 compared to today? (Hint: it takes about $640 in today's money.)