Bond for Deed?

[Katie West]

Hi everyone! So, the question I have isn't actually for an investment property at the moment. It will eventually be rented out, but for now will be my primary residence. I put an offer on a home for $88k. It was accepted and we moved forward. My financing was a VA backed loan. When the appraiser evaluated the property, he assigned the value at $65k. The seller purchased the property in 2008 for $86k.

Now, the comparable used in the area are accurate, however, there has been a lot of activity recently of investors buying similar sized distressed properties for flip, or renovate and rent. Overall, property values have increased. This property has been fully renovated and needs no work. An independent apparaisal was conducted in 2013 that valued the property at $86.5k. We requested another look from the VA, but it was declined.

So, we sent the request that the sale price be lower to the appraised price, but the seller cannot come down $20k as she still owes more than that.  She has indicated that she is open to a bond for deed.  I believe I am willing to entertain this if we at least split the difference, so set a purchase price of $75k.

I know that when I go to rent it in a few years I'll be able to rent for at least $900 per month based on the area.  My loan payment at $88k was only going to be $560, so it cash flows. 

What do you all think of this deal?  I personally love the home, but aside from that, it will make a great rental soon.  Great schools, close to in demand areas.  I just didn't expect my first home to be a seller finance.

Any suggestions on structure and such are also welcome.  Oh, and I am in Shreveport, LA for any locals.

[Katie West]

I am still in the process of working this and getting a second appraisal outside of VA and will update with the results soon, but I dropped back by to say welcome to Louisiana @JJ Conway!

I also really appreciate ya'lls advice. I'm definitely not moving forward with the bond since it's too risky, but we have a second appraisal ordered thru FHA now since 2 other appraisers agreed that the original valuation seemed to be too low. I'll let ya'll know the results!