Owner Financing, Good Deal?

[Matthew O'Dell]

I am new to real estate investing! My first move was a cash out refinance of my primary residence. I was able to get 140k without raising my monthly payment. 

Over the last two months I have been talking about what I would like to do with real estate and an associate sent a friend of his my way. He has a home in a really good area, in between elementary and jr. high schools, good access to amenities, and a quiet, working class neighborhood. There is room for appreciation (I think) but home prices seem high here in Utah. He said he is interested in selling his home by owner for what he thinks is about 30k under value. 

This would be my first deal but when trying to make any numbers work it would not cash flow, it could be possible to make some money reassigning the contract if I knew someone willing to purchase but have never been associated with a wholesale. 

I thought about buying it myself. If I bought it at the 390k he is asking and put up to 10k in cosmetic upgrades (assuming he is honest about the current condition) it could make sense. Similar homes in the area are selling or valued at 420-455. I am going to see the home on Tuesday with a friend that is an agent so he can tell me what people are looking for when buying and to get a better senses of comps.  

My concerns are the amount of margin that will be consumed by financing the property as well as capital gains taxes and possible holding costs. I was also wondering with being in a "buyers market" who is typically paying for the closing costs on a traditional sale, the buyer or the seller? I think the seller paid when I purchased my first home.

The extent of my financing experience is the first FHA purchase on my home and a few "Smart Refinances" and a traditional cash out refinance all on the same home.

Can anyone help explain if there is a way for my to offer the seller options that could make this a deal? 

Also, I know this would be a "flip" and is somewhat controversial when referring to real estate investing and with that I have a question if it is possible to take any equity from a deal like this and reinvest into a true income property to defer taxes?

Thanks for sharing your knowledge and helping out a rookie in advance!