Potential Deal: How can this be seller financed?

[Mitch Kennedy]

Hi BP! 

A seller contacted me after receiving one of my pieces of direct mail and is interested in selling their duplex. She mentioned she's willing to do seller financing however she still owes $95k on her loan. I asked her what she'd be willing to sell it to me for and all she said is she wants to walk away with $35-40k. She's a family friend of my wife's family and is open to working with me on how we can structure this that benefits both of us.

Each side is a 3 bed/2 bath, tenants have been there for 5 - 9 years and are currently paying $650. The property is only ~25 years old and with some cosmetic updates could rent for $850 each at least.  

Is there a way that I could structure this deal using seller financing where she get's a chunk of her $35-40k now and the rest once I fix up the units and refinance? Appreciate and advice from you creative financers out there. I'm in Wisconsin if that helps. Thanks! 

[Mitch Messer]

Thanks for the mention, @Brenden Mitchum! Yes, you're on track!

@Mitch Kennedy, I'd definitely explore this as a sub-to deal, but there's more info needed:

• What is the property currently worth? Taking over $95K in debt and offering to pay $40K to the seller values the property at $135K. Is that an accurate assessment of the value?
• How much is needed in renovation cost? At 25 years, you would expect the roof, HVAC and water heater to need replacement, if they haven't been already.
• What is the monthly loan payment?

With this information, you can project operating expenses, net operating income (NOI), cash flow, and cash-on-cash return.

Subject-to is just an acquisition tactic, with no guarantee that you'll actually make money down the road.

Running the numbers is the first step to determining if this is REALLY a great deal or not!

Lastly, I would urge you to be EXTRA careful working deals with family or close friends of family. Too often, today's "great deal" becomes tomorrow's awkward Thanksgiving discussion topic.