Experience with seller financing?
Just curious if anyone here has negotiated seller financing on the commercial side of real estate, I am particularly interested in multifamily. Thanks!
[{"id": "d4twf3f", "text": "Actually in the process of negotiating seller financing for a smaller multifamily project right now. ", "replies": [{"id": "d4ukwck", "text": "Awesome, can you expand on this? I figure smaller multifamily properties would be more receptive to seller financing. All of my experience is in residential real estate and looking to get my feet wet in commercial. What kind of terms are you shooting for? Representing buyer or seller?", "replies": [{"id": "d4uwx1m", "text": "Absolutely. My seller is looking to prolong his tax liability so he is flexible on terms but is typically looking for at least 20% down. \n\nSeller financing really gives you the ability to choose what side of the spectrum you fall on, cash flow or building equity. \n\nThere are many moving part to land contract/seller financing. Are you looking for low payments for cash flow? How many units are you looking to buy?", "replies": [{"id": "d4vbs3i", "text": "I am definitely a fan of the cash flow strategy. I'm looking in the ball park of 10-20 units and either in the B or C class type buildings. What kind of terms would you think is realistic for a buyer looking for cash flow?", "replies": [{"id": "d4vc9ro", "text": "As low of a down payment as the seller is willing to go and shoot for 20-30 year amortization with a 10 year balloon. \n\nIf the seller isn't in a rush, it's a great way for him/her to make money on the land contract without having he burden of being a landlord. ", "replies": [], "depth": 5}], "depth": 4}, {"id": "d4wcjpn", "text": "Is that 20% tax-exempt?", "replies": [{"id": "d4wcugp", "text": "No, but the tax liability depends on your basis. The seller will still need to pay taxes just not in a lump sum.", "replies": [{"id": "d4wcvsr", "text": "Isn't this going to severely hurt your fee? What's in it for you besides the relationship?", "replies": [{"id": "d4wuy0y", "text": "Nope, I still get paid on the full purchase price. From time to time if the down payment doesn't cover closing costs and my fee, I will get paid in installments. Doesn't happen very often.", "replies": [{"id": "d4wvau4", "text": "Could you please reveal to your level of comfort what market this deal is happening in ? Thanks. ", "replies": [{"id": "d4x03vi", "text": "Around the Metro Detroit area.", "replies": [], "depth": 9}], "depth": 8}], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "d4u7lzr", "text": "the best thing you could ever do.  Also ask for it!", "replies": [{"id": "d4ukxuj", "text": "Thanks, sounds like you have done this before?", "replies": [{"id": "d4vaxbe", "text": "Yes i have.  You need to draw up a promissory note between you and the seller.  The best part of it is there are no closing costs associated with the loan with the exception of some attorney fees.  I would suggest you hire an attorney to help you draw up the note.  The prom note should not be longer than one page.", "replies": [{"id": "d4vbtxb", "text": "Solid! Can you expand on what kind of deals you have done and the structure of the terms? ", "replies": [{"id": "d4vc66i", "text": "&gt; o\n\nI purchased a car wash and a 5 unit multi family home.  Both with seller financing.  \n\nStructured it where I only transacted my down payment with the seller.  Our attorneys were there at the closing, paperwork was signed,deeds were transferred and title was clean.  \n\nOnce the prom note was put up, my accountant booked the transaction for tax purposes and we went from there.\n\nI forgot to mention in my other post, you need an accountant as well.  All together, it should cost you no more than 2-3k for the closing rather than 15-25k.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "d4usenb", "text": "I've done it twice. Both times on raw land for future development to basically bridge the gap over conventional financing. That's the fun part about real estate, just think something up and propose it. Maybe you'll make a deal. ", "replies": [], "depth": 1}]