How to structure seller financing

[James Thiel]

I have an opportunity to buy a house at a solid discount and want to do seller financing, but don't know the best way to structure it so both parties are happy.  Here's the scenario:

My friend wants to partner with me 50/50 to buy house from his sister.  The house is their father's home that he has owned forever, but he is 88-yr old and going to an assisted living facility. Daughter/my friend's sister is on title to home (my friend didn't inherit 1/2 I guess) and wants quick exit and cash. She's well off and doesn't really need the cash, but does want it to pay off small mortgage left on house ($25K) and cover $4500/mo. of fees for her dad's needs in the facility - very admirable.

She wants minimum $265K for the house and will sell to her brother without listing on MLS. He thinks we should write a check from our own funds for $132.5K each, then we'd still put in another $10-15K each for minor rehab. The house is worth ~ $340K as is with an ARV of ~ $375K and is in great location/market so should sell quick.

I don't want to put that much of my money into the deal since we're not experienced flippers, but would be willing to do a 20% down payment with him and present seller financing for the rest to his sister.  I am looking for advice on some options I can present to her that might work?  Or hard money loan to buy the house cash from her?

Thanks!

James 

[Will Barnard]

Yòu didn't state how much in repairs are needed, but that aside, why not offer seller $70k cash down ($35k from each of you plus closing costs) and seller carries back $195k loan at 5% interest with a deed of trust securing the loan. Seller gets the $25k current mortgage paid off plus $45k in cash and monthly payments of $1,046.80 per month (based on a 30 year amortized loan). The $46k cash is enough for 10 months of the care and your first 10 months payments provides another 2 1/2 months (just over a year in total) and by that time, you should have flipped this project, paid it off in full and sellervmakes the $265k sold price plus the interest paid. You partners put less down, and seller gets more over time.