Need help structuring a seller finance deal

5 Replies

Greetings! I have a two part question:

1) Is there anyone in the Southern Indiana (Evansville) area that has done or knows someone that has done several seller finance deal? I've had several opportunities come my way that has the potential to be a seller finance deal.  I am very interested in going this route and am reaching out to see if anyone can help.

2) I have been working this deal for a little over 6 months.  The seller is an older lady who tried to list the property with a realtor but did not have any luck so it is now off the market.  She is asking $20,000 for the deal.  Will need a few thousand in rehab but can rent for around $800.  The only reason she cannot do a seller finance deal is that she is currently living in a rental house that is based on her income.  If she reports more income each month then her rent goes up.  Has anyone come across this type of situation? My only thought is seeing if she has a family member who I can make the payments to so it does not show up on her income. Is there a legal way to do this Any other options?  If you were to structure this deal what would it look like?

Thanks for the help!

@Ray Van I don't have any experience in your exact area, but I do have some experience putting together seller finance deals for clients. Check the laws in your state, but she could potentially set up an LLC for you to make the payments to.

Originally posted by @Billy Deese :

@Ray Van I don't have any experience in your exact area, but I do have some experience putting together seller finance deals for clients. Check the laws in your state, but she could potentially set up an LLC for you to make the payments to.

I didn't think of that. Thanks! I will look into that.

 

Well, there are a few things that I can think of off the top of my head, but it really comes down to what the lady would like and why she is doing things. Such would include:

1. Why is she selling?

2. What does she want out of it? An income stream, a set amount of cash (and if so, what will she do with the cash; just look at it on the kitchen table or something else), to fund a specific purchase, to gift to family members, etc?

3. What is her basis in the property?  As if she has $20k or more in it, it is potentially a small to non-issue.

4. Does she need the cash now or latter?

5. If she gifts the property to someone else, is she okay with them receiving the related income (as if they are just being used as a funnel with the intent the funds will be "gifted" back to her, it is a step transaction, and potentially tax evasion).

6. If her income increases, how long does her rent increase? Is this changed monthly, annually, or something else?  And what sort of change are we talking about (as if it only changes as long as the income lasts, it may be worth it to just bit the bullet, as some of the methods I can think of have downsides, such as filing fees for different entity types, potential issues with lease options or option to purchase payments, co-ownership, etc).

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