Seller Financing from a friend

[Sawyer Kelly]

Hey BP community,

I have a friend that is talking about selling a house he owns free and clear. He's had it for 10+ years and has been renting it out successfully. However, he's tired of dealing with it and wants some cash to buy an airplane. I'm trying to figure out how I could make this a good deal for both of us. If he'd be willing to do seller financing with some sort of down payment, but sell for below market value, then he'd be getting some cash without having to pay the capital gains and I'd get a good deal. I'm sure there are some holes in this logic, but I'm still doing research and figured I'd see what you guys had to say. Thanks for any insight.

[Aaron K.]

@Sawyer Kelly Ok new question, most people who are going with seller financing don't have $40k for down payments, so would you be accepting worse terms than if it was a bank loan, if not and the terms would be equal to or better than a bank loan has your friend done the math on just biting the tax bullet.  He will pay his gains eventually it is all a question of when, and if he is loaning you money at 3.5% or something similar that probably isn't the best use of his money long term, but if he loans you money at 8% you could probably get the bank loan for less.