Our 1st time purchasing with owner financing - please advise

[Rachel Johnson]

Some background...For the past 4 years, our investing experience has been exclusively purchasing & flipping homes, mostly off the MLS, most have been foreclosures, working on our 10th one now. Our goal has been to flip to grow working capital to eventually begin BRRRRing.

We were just approached to consider purchasing a neglected home from a distressed seller. 
Outside our comfort zone...time to grow!  Time to exercise what we've been up to now only been learning/hearing about...

We are preparing for a second conversation with this seller, and to present numbers. In our previous conversation, we discovered he is willing to accept a small down payment, monthly payments to cover his mortgage for the months while we rehab, and pay the balance after we refinance or sell it. We've determined ARV should be $110-120k if market stays high. It's a 3/1, 1066sf, decent area. We estimate $40-45k of rehab, $10-12k for profit, and another $8-10 for selling/refinance/holding costs, leaving a purchase price of $40-50k.

We have yet to discover his equity in the property, but expecting it to be pretty high considering he's lived there 20ish years, therefore I also don't feel too worried about his loan getting called due, since we should be in this arrangement for less than a year. But we don't know much he'll walk away with. In our 1st conversation he didn't want to tell us his mortgage balance, but I kinda jumped the gun and asked that question way too soon.

This being our first time to work directly with a seller, we're a little uncertain how to approach the seller with our offer.  Also, we're concerned about the risks we've never had to deal with before, such as:

1-how do we ensure he properly pays his mortgage and property tax payments while we rehab and not pocket the money instead?

2-how do we ensure he completes his end of the deal, i.e. he might change his mind once he sees his house getting fixed up and decides he doesn't want to give it up

3-how do we protect our rehab costs/our vested interest until it's fully ours?

Thanks for your advice!