When you sell a multifamily property, you usually think in terms of one number: the sales price. But with seller financing, you don’t just collect the price—you also collect interest over time. Let’s look at an example.
Example Scenario
- Sales Price (Cash Sale): $1,000,000
- Sales Price (Seller Financing): $1,000,000
- Down Payment from Buyer: 20% ($200,000)
- Loan Amount You Finance: $800,000
- Interest Rate: 6%
- Amortization: 20 years
Cash Sale: The One-Time Payout
If you sell outright for cash:
- You receive $1,000,000 at closing.
- You may owe capital gains taxes immediately.
- No ongoing income after the sale.
Seller Financing: The Income Stream
With seller financing at 6% over 20 years:
- Monthly payment from buyer: $5,733
- Total payments over 20 years: $1,375,920
- Plus the $200,000 down payment you collected upfront.
Total received = $1,575,920
That’s $575,920 more than the cash sale.
Side-by-Side Comparison
| Option | Upfront Cash | Monthly Income | Total Over 20 Years |
|---|---|---|---|
| Cash Sale | $1,000,000 | $0 | $1,000,000 |
| Seller Financing | $200,000 | $5,733 | $1,575,920 |
Why This Works in Your Favor
- You Become the Bank – just like a lender, you earn interest on your money.
- Tax Benefits – you may spread out capital gains over years instead of paying all at once.
- Steady Income – instead of a lump sum, you lock in guaranteed monthly cash flow.
- Security – if the buyer defaults, you keep the property and the payments already made.
Final Thought
Seller financing isn’t for every seller—but when used strategically, it can significantly increase your total proceeds, reduce your taxes, and provide peace of mind with a reliable income stream.
👉 At The Multifamily Cash Buyer, we help sellers run the numbers on different options so you can see exactly what works best for your goals.