Owner Financing Deal!
I'm working on a deal for 2 6-unit apartment buildings. (I posted this question in the legal forum and didn't get a response - hopefully I will get some tips here 
). The owner is financing 200K of the 250K for each building. I have financing for the remaining amount. My question is, as the buyer, what are some things I need to make sure happen to protect me. I.E. Who holds the deed? Current owner being added to the insurance? etc etc. I will being running everything by my lawyer, but wanted to have a idea before we started. Thanks.[ Edited by hoober on Date 05/04/2004 ]
As a follow-up. The owner has agreed to take the second position with the bank as the first.
The best way would be to get the deed and have the owner hold a note and mortgage just like the bank did. I'm curious why the seller would take a 2nd when the bank only has 50k into it.
Owner is retiring and wants the sale. Surprized me too, but won't complain. The apt's will cashflow at $800-$1000/month each when fully rented. I est that the FMV is 300K each. No repairs needed, still need to fill a few apts.
Anything else I should be concerned about? [ Edited by hoober on Date 05/04/2004 ]
How did the deal work out? I would say you have most things covered if you follow the advice on taking the deed and recording the 2nd.
As to the seller's motivation. If the seller is an experienced investor he likely figures he is taking on a manageable risk. You are saying there is 50K in equity on the top. There will be 50K per property coming to the seller. He knows the deal will work and will expect monthly payments.
Not that much different then being in 1st. He can foreclose if you miss the payments and just take over the 1st. If you miss the payments on the 1st he is at risk but I expect he will manage that issue.
If he had offered seller financing and took a 1st position many buyers would not have the cash deposit. Hence he has more buyers to pick from.
Odd but not unreasonable from what I can see.
John
[addsig]