Feedback on this deal

[Chris Gonzalez]

Hello Bigger Pockets friends!

I may have found my first rental property and I would like some input on this deal.

I was talking to a co-worker about buying a property and he mentioned this friend of his had a single family home that he would sell for $125,000 (below market value) to that friend. This house is a mostly original 1950’s home that belonged to his mother and he inherited it a few years back and has been living in it since. I met with the guy over a drink and he told me about the house and that he wanted $200,000 for it. I’m thinking he may be hoping I trust his Zillow zestimate. Anyways, the numbers do not work at that price and I mentioned seller financing and he seemed interested in that.

So, knowing that he told a friend he would sell for $125,000 here is what I would like to offer. As he is looking to relocate out of state and mentioned he would need some cash to start a new life.

I would like to offer $135,000 with $40,000 down (from my heloc) and then pay him interest only for a year. I would owe all interest due if I refinance less than a year. I am anticipating $10,000 to make rent ready. He’s a house smoker and it still has some original shag carpet.

Questions:

1.Has anyone done anything similar?

2. His $200,000 price is based on “what he saw on Zillow”. How do you handle that “research” he did.

3. Does anyone have a good template to break down what payments he would receive? (Obviously depends on interest rate)

Thanks in advance!!