Seller financing as a buyer

[Steve Hiltabiddle]

Hi BP Community, 

Seeking some strategies/advice on how I, as a buyer, could structure a purchase with a seller who has a duplex free and clear to help reduce the appreciation taxes on the sale. This is an older owner (70+) with some health problems so seller financing for a long term may not make sense to him. He is knowledgeable about the market and was a GC so I believe the property needs little work. Rents seem to be inline with market. I’m not sure if there is much of an opportunity as an investor but I’m thinking if I can offer options, when he’s ready to sell, he may consider me and my options versus paying a realtor to get market value. Being outside Philly, price to rent is on the high end, rent currently is about 1% of reasonable market price. I would still need to get additional data from him about expenses, etc to fully vet the deal.

My thoughts and assumptions on tax value are multiple offers:

• 1) Seller financing for 80% after 20% down from me – Best tax advantaged?
• 2) Seller financing for my 20% with 80% conventional loan – medium tax advantaged?
• 3) Somewhere in between 1&2
• 4) Cash offer: this would have to low ball (to refinance later) 0 tax advantaged. (this may not make any sense for this)

I feel like with the right interest rate (low), purchase without a realtor (saves 6%) and tax advantage based on his need, I could negotiate a low enough price where 1 or 2 or something in between might make sense.

Am I thinking about this correctly or missing something obvious?

Thanks in advance for any thoughts.

Steve