Financing a Fourplex

I am a newbie and only have one Condo that I am renting out right now and basically breaking even. I want to put an offer to purchase on a private sale of a Fourplex. The owner seems very flexible. He will accept $205,000 for it and his assumable mortgage is at $162,000. He is worried about the $3500 penalty for breaking his mortgage. So I was going to offer him $203,250 and pay the $3500 penalty for him at a later date. I will try to explain.

I do not want to assume his mortgage but I do not want to lose the deal over $3500.(he wants it assumed) I believe the property will assess for close to $240,000. The bank will only give me a mortgage for 85% of the asking price($203,250). So I will have a down payment of around $31,000 cash(15% of $203,250). I want to ask the seller if he will finance around $16,000 of the $31,000 Down payment. He will get roughly $10,000 from the bank from my new mortgage. He will receive $15,000 cash from me at closing. I will pay him back the $16,000 plus the $3500 penalty for his mortgage($19,500). This will leave him with a total of $206,750 when all is said and done. Higher than his accepting price. I then want to refinance for 85% of $240,000. This way I can pay the seller back the $19.500 and have some left over. I am not sure if he will accept this offer and I would like anyones opinion on a way to do it better. I want to try to get the money back to him in 2 months. Maybe I need to do more than just give him the $3500 penalty back…Maybe I need to add some interest. I am not sure because I have never done this before. If you know of a different way to make this work that would be great. I have only about $15 to $20,000 for a down payment…but the least amount would be best.

Does this seem possible? I know it depends on the assessment and it may be a little lower or a little higher. But this is the only way I see worthwhile because I do not want to put $31,000 into one property when I can use some of that money for another one.

Any help or advice would be greatly appreciated. And thanks for all the posts, it has been very educational.


  1. I would post this in the Financing Forum, thats where the people you need to talk to hang out.

  2. Is the $205k his asking price, or did you already negotiate that? You really need to look at your NOI, expenses, and how much the place will cashflow at whatever your offer is to purchase it. That should determine how much you offer, not what he is asking.

  3. Try to use as much OPM as possible, in this case because he is flexible as you say, use his money–do a owner carried note for more and use your own cash less.

Thanks, I will post it in the finance section also.

His asking price was $214,900 but like I said he is very motivated. The positive cash flow after all expenses is $560/month. It needs some paint and carpets but it is fully rented and brings in about $2200 a month.

I just need some input on how to go about asking the seller for owner financing to make it work.

Thanks again and I look forward to other posts.


There may be lenders that will finance the entire deal.provided the FICO is there, you have good cash reserves ( 6 to 8 months PITI), and the cashflow of the acquiring property is decent

That may solve some of your problems