14d • Creative Finance
Owner finance offer
Need advice. Owner has no knowledge of owner fin. Presenting the benefit of owner fin. Am I on the right track?
Traditional sale:
Sale Price $425,000
Real Estate Commission (6%)– $25,500 7($425,000 × 6%)
Estimated Seller Closing Costs– $13,500
Estimated Capital Gains est. $204,500 @ 17.5%– $35787
Estimated Net Proceeds to Seller
$350,213
Owner Finance: OFFER
Sale price 350000
Down payment $20,000
Owner finance note for the remaining: $330,000
Interest rate: 3%
Term: 30 years (fully amortized)
Balloon payment: We pay off the entire remaining balance after 8 years
What you actually receive over the 8 years.
Down payment (day 1) $20,000 pure cash profit
Monthly payment (years 1–8) $1,392.97/mo × 96 months = $133,725
Part principal, part interest Of that $133,725: Interest portion ≈ $71,150 your profit minus taxes
Principal portion≈ $62,575
Balloon payment at end of year 8 ≈ $267,425 (remaining balance) capital gains
Total cash you receive over 8 years≈ $421,150
Your true profit (down + interest)≈ $91,150
Estimate Closing Cost ($5,200)
Capital gains ($35,787)
Net Proceeds $380,163
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Owner finance offer
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