Quick Offer Analysis - Seller Finance Resale Price

Here is a back of napkin analysis on how i underwrite my SF deals.

90% of the houses I do are entry level or starter homes. My buyers are currently renters. So I am looking to position them between renting and buying at the same monthly payment

Example - 3BR-2BA 1200sf house

Market Rent - $1600/month

Property Taxes - $45/month

Homeowner Insurance - $60/month

Loan Service Fee - $35/month

This means, my seller finance principal + interest payment (PI) on the seller finance sale can be $1,460 (Market Rent - (Taxes/Ins/Loan Fee)) so the all in monthly payment is equal to market rent.

Seller Finance Loan Terms -

360 months

10.0% Interest Rate

$1,460 PI

Loan Amount - $165,604

Assume a $25,000 down payment from buyer and now our Seller Finance Sale price is at $190,000

If I'm making offers on properties, I shoot for 45% of seller finance value if the house needs some work or 65% of seller finance value if just a clean up before resale.

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