Has anyone partially financed the sale of a commercial building?
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[{"id": "i1tcc7u", "text": "Private mortgages happen all the time. But without knowing your situation or the property it's literally impossible to provide much info.\n\nIf you're going to do it make sure you have an airtight agreement in place reviewed indpendenly by your lawyer.", "replies": [{"id": "i1tj4j9", "text": "My attorney will be handling everything, if I decide to proceed. I'm just wanting to know if anyone has any experiences to share or additional advice to offer.", "replies": [], "depth": 2}], "depth": 1}, {"id": "i1tn0x9", "text": "Seller financing is pretty common, but I'd be happy to assist your buyer in finding debt to get him to the closing table, if you'd like. I'm a commercial mortgage broker.", "replies": [], "depth": 1}, {"id": "i1trr8z", "text": "Think about and put a value on the flexibility you're giving up. Just like the bank you can't demand the balance if they aren't in default just because you need or want to do something else with the money.\n\nWhat magnitude are we talking about here?", "replies": [], "depth": 1}, {"id": "i1u0h1g", "text": "why can't they get a mortgage?  if no one will lend THEM money then that is a problem you should consider.  If no one will lend ON THE PROPERTY that is also a problem you should consider.\n\nI've done a couple.  What are you actual questions?  Yes it happens but generally in situations where a bank won't lend.  The why won't a bank lend question pretty much shapes the discussion here.", "replies": [{"id": "i1uhwxu", "text": "They are solvent and the property is mortgageable. Those are not issues.\n\nI'm just looking for the pros and cons.", "replies": [{"id": "i1xglni", "text": "Pro's are usually just it gets the deal done.  The interest rate is typically above market too.  These are also commonly structured in a way where buyers default is not the worst thing in the world for the seller (ie large downpayment).\n\nCons are obviously you defer getting your cash, you have a person you have to chase down every month, you lose managerial control (ie if we are talking a building with tenants they might run it into the ground), its legally complex, foreclosure can be costly and time consuming, eviction may not be available to you, and you may not be able to attach debt to the property.\n\nThis is a whole world of ways to do this from land contracts, leases with options, transferring and liening etc.  Each has its own risks and issues that can come up and it is real state specific so make sure you attorney about this a bit before you agree on a structure.  For example you may (or may not) be able to do it so you can evict vs foreclose which saves you tons of money and headaches.\n\nWhy does he want to do this?  A bank should kill the seller finance terms.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "i1u97xu", "text": "We sometimes do seller financing if it helps facilitate the deal and it\u2019s a buyer we find reputable. I think it would be hard to be burned with a 50% down payment as long as you are 1st lien and the mortgage is reasonable of course.", "replies": [{"id": "i1ugx3w", "text": "That's pretty much what I was thinking, too. I own the building outright, and the buyer is wanting to pay it off in less than 5 years. \n\nWho usually pays the taxes and insurance on the property in this situation? I can see where this could cause issues for either party.", "replies": [{"id": "i1ukkvc", "text": "They technically own the building so all of that is their responsibility. You will want to track both though to ensure you are not \u201cnaked\u201d on insurance or at risk of a tax lien. We will force place either and capitalize to the loan if it comes to that.\n\nYou could also escrow for the coverage in the monthly payment and handle the coverage and taxes if you prefer.\n\nEdit: you would only force place insurance not taxes but we would still pay taxes and capitalize if needed.", "replies": [{"id": "i1ulrg9", "text": "Thank you.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "i1uhp06", "text": "Pass on this. If they can\u2019t get a conventional or SBA financing, they probably have issues. You have no way of understanding their issues or true financial position.  Don\u2019t let someone else make their problems your problems. I\u2019m a Commercial Lender", "replies": [], "depth": 1}, {"id": "i1ut0yq", "text": "I think seller financing is great, and if you\u2019re not  doing a 1031, it can also help with the tax burden if you have a lot of the asset depreciated already, since it spreads out the gains as an installment sale.  I\u2019ve bought (and sold) a number of times this way, rather than using a bank loan, even though I\u2019m capable of getting traditional financing.  It\u2019s hard to beat the flexibility of dealing directly with the owner.", "replies": [], "depth": 1}, {"id": "i1vmn7d", "text": "Not sure why you would do it. And it they\u2019re paying you 4-5% on the balance, you\u2019re losing money vs being paid in full and reinvesting that. I would push for them to get a loan and buy it.", "replies": [], "depth": 1}]