Seller Carryback - How to Structure

[Dulce Beltran]

Hi BP, I'm looking into a property and want to ask the Seller to do a carry back. The seller is the heir as the original owner passed away. The property has been vacant for years now and am curious how to structure a Seller Carryback as I do not have experience with this area. For instance, for simple numbers, the house purchase price at $100,000 with no out of pocket $/downpayment. House needs another $100,000 worth of work for a total of $200K seller carry back at 5% interest rate and no points (do they ask for points? what have you seen). Seller agrees, how does seller pull out the $100K to do the renovation money to lend me to do the work? I plan on refinancing it 6 months later. 

Also, the actual note, how does one create one and make it legally binding? e.g. they become the lender and file a trustee's deed or is there a need?

Is there anything else I'm missing? I appreciate all your help! 

[Christopher Phillips]

@Dulce Beltran

Seller financing is for the purchase price, doesn't include rehab. 

$100,000 5% 30 year amortization 5 year balloon.

Gives you time to rehab it, put a tenant in it, refinance it, hold or sell it.

Some seller's might want a down payment.

Seller financing is a promissory note. They don't cut you a check. So, you would need to raise funds elsewhere for the rehab.

The note would be drawn up by a lawyer and recorded at the county clerk's office like a mortgage.