How do you organize seller financing?

Question

I am new to investing and after flipping a home I was able to use that money to purchase a duplex that I am adding value to and living in for free because the tenants pay my mortgage. There is a family friend who is helping his daughter sell her house in my area. He has a lot going on and I think he sees this property as a nuisance. He is also aware of what I am trying to do with real estate investing and is supportive of me. All this seems like a perfect opportunity for me to approach him with a solution that benefits both of us.

I do not currently have the income to qualify for financing for the 300k selling price he is looking for. My hope is that I can come up with a seller's financing option. I am thinking maybe a 30 yr fixed rate with the option to pay it off after 5 years. So they would receive monthly payments from me and after 5 years I can refinance and pay them off.

Is this a plausible idea or too far fetched? And who would I contact to help right up the paperwork to complete seller financing?  Any advice is greatly appreciated.

Teri Feeney Styers · Answer

@Matthew Scott it could be plausible. Do they own it free & clear? I am not a fan of the wrap mortgage / subject to type financing myself. If there is an existing mortgage and you still want to go that route in look for threads that explain how that works. So, in Colorado you would use a title company to handle the transfer of ownership. They will research any liens on the property. Other than title work you will need a Deed of Trust (recorded document that shows that you owe money to the prior owner and the gross amount) and a Promissory Note (document that shows when & how payments will be made).