Structuring a seller financing deal?

[Jeremy Segermeister]

I have a lead on a multi-use property that could be intriguing. It is FSBO, owner is old school and simply looking to get rid of the headaches associated with being a landlord and fund his retirement. It has 2 apartments, 2 storefronts and a storage area. He owns it outright and has significant gains on it. He said he is willing to get creative with the structure.

Asking Price is $1.5M, current gross income is $80k which he claims he could "easily" get it to $100k, but he likes sticking with his long term tenants. His claimed expenses are only ~$20k. I asked for a rent roll and actual financial details. This is overpriced at a best in place 4% cap rate. I haven't even begun to explore the condition of the property.

 On the phone he suggested doing half seller financing where he would hold the note for 15 years at ~7% interest rate. He said "if you sold the property the interest would be due, I'm using this for my retirement. We could lower the price for a higher interest rate, whatever you want to do".

With that said, I think he knows his ask is far too high. So what are some creative ways I could structure the deal that benefits us both? I technically don't need the seller financing and could qualify on my own, but it is a nice to have. A lower "purchase price" presumably would help both of us from a tax standpoint, but hurts me on depreciation?

How would you structure this (after due diligence on the property is done)?