How to structure a deal to buy properties from parents
Hello all! First time poster here looking for some advice. A little background information on the situation. My parents have been small real estate investors for years with ~12 SFHs. They have always self-managed these properties but are now looking to retire and shed many or all of the properties. I have a rented out my first home for 6 years so I have some experience and I am thinking about expanding my investment activities. This provides an opportunity for me to acquire a few of their properties but I am concerned about how to structure the deal so that it's a win-win for both of us since I obviously do not want to damage my relationship in the hunt for the best deal etc.
Why this deal makes sense:
- They would be willing to seller finance for a low interest rate & down payment since I'm not a risk and they don't need the money immediately.
- I can cherry pick from their properties to get the 3-4 that make the most sense for me. I have direct knowledge of all the properties and their histories including rents/costs.
- Direct sale so no relator/mortgage fees.
Any advice on how to structure this to be fair to both sides? I think there are enough benefits for me that I don't have to have the best deal considering what I will gain from the inside knowledge and financing. My thought was that we agree on a discount rate from an appraisal value. Then get all the properties appraised and if the numbers work out on my side I buy the ones I want at that price.
Does this plan make sense? What should the discount rate be? I was thinking 15% or 20%. Any other ideas on how to structure this?
Thanks!