First Deal! Seller finance vs Lease option vs Rent to Own

[Hersh Shah]

Hello All!

I am looking for some advice on how I should make my first home purchase happen. I found a home that was for sale by owner. Seller is possibly open to selling with a lease to own option.

We aren't able to do a conventional or FHA loan for the purchase amount at this moment so we want to know how we can best structure this deal to make it a win win for both parties.

About the Property:

Asking price: 375K

Last Sold: 1998 for $118k

Unfinished basement that we will finish to increase value

Zestimate: 330K (I know I will need to get an appraisal)

Not certain if free and clear or still 10 yr note left from purchase date

Seller's Motivation:

Does not live there

Tried to rent it but no takers

Has primary residence elsewhere

Assuming the appraisal comes in at 330K, is it best to do a Lease with option to buy in 5 years, Seller financing or another option I am not aware of. Our goal is to buy this home to live in for 3-5 years and later keep it to rent out to start our REI journey.

We are in Georgia and I wanted to take over his mortgage to relieve him of payments and buy in 5 years for 350K (minus our payments over the 5 years). To execute this agreement, I was thinking of a 5k payment now that would be non refundable. 

Please advise if my thought process is right or what I need to do to better structure this deal. 

Thank you for any and all help!