How to structure this seller-finances offer on a flip?
I live in a desirable neighborhood in Portland and there’s a house around the corner I’ve had my eye on that’s been on the market since the spring. It needs literally everything: electrical, roof, ext paint (lead), plumbing, kitchen, and baths. Floors are in great condition. They came on the market way too high and have already turned down a few offers. (Emotional- it was their moms). By now they’re highly motivated because homes don’t really sell in winter here, and they’ve already come down $100k in price.
I walked it yesterday with my agent and contractor. At the price they’re at now, the margins are still too risky to do a flip.
I’m considering putting together a seller-financed offer where I’ll put down $X and pay $X/mo and do all the work in order to have it back on the market by next summer. In order to mitigate the risk to myself I wanted to build in a guaranteed amount I get from the sale and stipulate contractor and I get paid first, and the sellers get whatever the balance is. In order to incentivize all parties to be on time and budget, as well as do high quality work required for this neighborhood, build in a schedule of profit sharing at various thresholds of sale price, to be shared between me, contractor, and seller.
Has anyone done a deal like this? How should I structure offer? I’ve worked with the contractor on a big project before so I’m confident in that side of the equation.
Any thoughts, concerns, advice, personal experiences greatly appreciated!