how to put #'s together for seller financing options

Question

i'm working to negotiate on a property from a friend (seller). the seller has been fairly set on their price, but they also are tired of sitting on a vacant property for the past 2 years due to lots of city violations from the property being a rental. nothing has been done to the property for those 2 years so there's a city violation notice on it. property now needs essentially a gut rehab.

property value as is realistically around 85k, but seller has been, imo unreasonably, wanting 115k for a while. however there is a mortgage on the property (so not free and clear) and i know one of the things that the seller wants to do with the money is to pay off the mortgage. i have no idea what the mortgage amount is. i also am confident there's no other issues such as tax liens or back taxes.

repair around 60k

arv around 185. my primary goal is to flip after around 3 months of work

i do not want to do a 203k loan because of the paperwork mess that comes with it and a conventional loan is absolutely not possible. given the current conventional loan rate is 3%. i would love some help on the numbers i can present. i just do not know how to calculate the monthly payment that i would ultimately pay the seller. something like this:

1) cash 50k

2) 70k(?) @ x% /30 Years with 10 year ballon if desired by him. $x month.2) 90k(?) @ x% /30 years ...........same...............3) 115(?) @ x% /30 years ........... same.............

thanks

Derek Dombeck · Answer

Everytime I make a terms offer, I make sure the seller understands the importance of us working together to benefit each other. One of the requirements, is they need to be honest with me about ALL the numbers, including their debt. If you new the terms of the debt, you could possibly buy the property subject to the existing loan and give them cash for their equity. Or, you could structure an option to purchase. Or, 20 other possible structures..........

My point is, you need more details about their situation and goals.

Derek Dombeck · Answer

I would learn as much as possible about Options, Lease/Options, Masterleasing, Buying Subject to Existing Debt, Installment Sales, and Tax Laws pertaining to real estate sales. Check out Cashflowdepot.com

Listen to Peter Fortunato, Dyches Boddiford, David Tillney, Jack Miller, and Bill Cook as much as possible. Jack is no longer with us, but the rest of them are friends of mine and some of the best creative deal structures in the country.

Nick S. · Answer

exactly the type of advice needed. much appreciated. looks like some homework to do on my end. my plan is to work with my attorney to draft up a few offers. i got confirmation that the mortgage debt is around $65k, but what is odd is that the owner bought the property 20+ years ago so unless some 2nd mortgage or refinance went wrong, i don't understand why so much debt would still be owed.

Nick S. · Answer

thanks. what i'm curious about are those different structure i need to read/learn more about so i know what options i have to give to the seller. for now, if we say the only debt is the mortgage of $50,000, what else should i be thinking about to give as offers?