Negotiated seller financing on 5 unit Mixed use - Now what?

[Matthew Morrow]

Hi all,

Have a great opportunity in my hometown to get into a 5 unit mixed use property. Seller and I have great relationship and he is willing to cover down $$ and closing costs- but also willing to seller finance the whole deal if necessary to avoid the banks profiting.This would leave me out of pocket with little to no cash- Awesome!

Property:

5 units split between two structures on one deed.  3 residential, 2 commercial 

Current Gross Income is 41K, Net is 25K, placing current market value around $250,000, verified with numerous local sources. 

Rents are all $150-200 below market and there is currently 2 un-rented garage bays and a large 500 SF shop which can be turned into a 4th residential unit- bringing the ARV to nearly $350K.

He has a Home equity loan with a $50 K balance, assuming this would be called due on sale. 

My question: 

How should I move forward being my first owner financed deal. He is willing to take around $1000 / mo or interest only payments for 3 years until I can refi out after rents are raised and value goes up. Owner is asking about how Capital gains tax plays into an owner financed deal- which I couldn't answer.

Does he remain on the deed and our sales agreement gets filed at the county? 

Any help is greatly appreciated. This seems like a huge opportunity. 

Cheers,

Matt