How does owner financing work?
What’s the minimum I can put down for owner financing if I wanted to purchase a commercial property or is that negotiable between me and the seller?

For example if I wanted to buy a 10 unit apartment building for $300k or $30k/unit. Could I put $15k(5%) down and finance $285k. Do I then pay interest to the seller each month on that $285k meaning I don’t borrow the whole $300k I only pay the seller $15k initially and pay the remaining over many years?

Please give an example with actual numbers when explaining please it’ll really help me to understand.
[{"id": "fyg82s4", "text": "The terms of the loan are entirely up for negotiation, banks have their typical terms but owner financing is completely up to the owner. He can ask for 5% or 50% down. He can ask for 5% interest or 10%. He can amortize for 10 years all the way up to 30. He can make it a balloon where the term is only 5 years and you have to refinance after 5 even though it's amortized for 25 years. \n\nI wouldn't finance an apartment building for less than 25% down, an interest rate less than 5% and I wouldn't have a term longer than 10 years though I might consider an amortization as long as 30 years.  In short, a bank would give better terms.", "replies": [{"id": "fyg9dy9", "text": "Ok", "replies": [], "depth": 2}, {"id": "fygo9wx", "text": "Best comment here", "replies": [], "depth": 2}, {"id": "fyh07fe", "text": "Why not consider amortization greater then 30 years? Your return on equity increase", "replies": [{"id": "fyh6roo", "text": "It's just not commonly done. If some one is asking for an amortization more than thirty years they usually just skip ahead to ask for an interest only loan, effectively an infinite year amortization.\n\nWhy not give interest only loans? It usually means the person hasn't put down enough to adequately cash flow, or they're over leveraged. They also lack the proper incentives to keep managing for years and years because they're not building up equity.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fyged1e", "text": "It doesn\u2019t unless the seller is incredibly desperate to unload a garbage deal. Also if the seller is an individual you\u2019re totally fucking them on taxes (assuming they have a gain... which they might not if they\u2019re open to entertaining giving seller financing to an individual). Oh and your loan agreement that you\u2019re going to pay for will cost more than your down payment in this scenario.", "replies": [], "depth": 1}, {"id": "fygf7gy", "text": "Commercial loan is 30% down. 5% is too far fetched unless the property is not worth the asking price. You get your mortgage and seller carries a second mortgage higher than first because you are not qualified for the 70% amount. Seller carried mortgage is like 10 year PITI. Owner is risking his mortgage because of default. Often it applies to land that is harder to sell. Income producing deals sellers have no problem finding qualified buyers.", "replies": [{"id": "fygfeed", "text": "I\u2019ve heard commercial property loans start from a minimum of 20% down and are usually 25% down. If owner financing let\u2019s buyers and sellers negotiate 5% isn\u2019t impossible. \n\nYou never know some investors especially with properties valued at the lower end such as $300k may not know what they are doing, he inexperienced or desperate thus they may just accept a Downpayment of 5%. \n\nBesides less work for them they just sit down and collect interest payments instead of having to manage the property.", "replies": [{"id": "fygns0d", "text": "The reason people sell stuff is to redeploy capital and loan asset managanement can be as intensive as equity asset management if you\u2019ve just given money to a sponsor who is so inexperienced that they can\u2019t rub rub 2 nickels together to buy a garbage $30k/unit apartment (which I\u2019m also like 99% sure doesn\u2019t exist outside of like Afghanistan),", "replies": [{"id": "fygnwxn", "text": "Well maybe but the thing is I believe it\u2019s possible. I believe 5% down owner financing deals happen especially 10% down. You just need to find the right seller and have good negotiating skills.", "replies": [{"id": "fygob88", "text": "It\u2019s also possible that I could win $500mm in the lottery, but it isn\u2019t going to happen. The opportunity cost of trying to do this is crazy you\u2019d be wasting everyone\u2019s time.", "replies": [], "depth": 5}, {"id": "fygt7ls", "text": "So what is your question?  Everyone is telling you it\u2019s unlikely unless you come across that one person that is completely unaware how owner financing works for most transactions.   Why stop there, negotiate 50% off and $0 down.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fygqbvn", "text": "It\u2019s all negotiable and depends on the sellers needs and motivation. I won\u2019t generally do it for under 30% down.", "replies": [], "depth": 1}, {"id": "fygsrxc", "text": "100% negotiable.  But if you think logically not just about what you would like, but about the seller's aims, you'll realize that a lot of theoretical possibilities just don't make sense for them.  \n\nHere's a somewhat specific example: \n\nOwner has a property that is underperforming.  They have neither the desire nor the knowledge to fix it.  \n\nOK Mr./Mrs. Seller, I'd like to do a deal where I take over everything.  From now on, instead of getting $X rent, paying all the expenses, and having whatever unpredictable amount is left, we're going to do a master lease + option.  At any time within the next X (e.g. 5-7) years, I can buy the property for (a lot more than it's worth based on current numbers).  I'm going to give you 50k (or whatever) right now that comes off the purchase price, then a guaranteed monthly lease payment of (more than your average net).  On top of that monthly payment, I'm going to pay an additional monthly option fee that will come off of the purchase price.  Each month with my check you'll get a statement showing how much in total option fees has been paid and what that makes the purchase price.  But the guaranteed monthly lease payment is not taken off the price.  \n\nNow over the next X years, you improve the property and get it performing to the point where a bank will lend on it at a value much higher than your option price.  With better numbers, you can sell the option to someone else (and keep the difference between sale price and your option price), or get your own financing and buy it.", "replies": [{"id": "fyi78wq", "text": "Totally agree. My friend asked in terms to have a date with the owners daughter and he agreed. Funny how this stuff works.", "replies": [], "depth": 2}], "depth": 1}]