"Owner Carries 2nd" for part or all of down payment?

[Daniel Dietz]

Hello All,

I have asked similar questions before, but have a 2 specific deals this time so want to try to nail things down to see if this can work. What I am wondering is what type of Joint Venture, Partnership, or other Entity would be the best route to go between myself (or my LLC) and the seller on these deals. Both sellers are open to options to make these work, partially due to my long term relationships with them, and their trust in me. The lender I am likely to use, a small local community bank, is working on figuring out what could work for this too.

Deal #1 - Duplex buy and hold rental. Seller would consider a LC for up to 5 years for 90% of purchase price with us putting 10% down, or carrying a second mortgage for 2/3 of the "down-payment portion" (20%), with us putting 10% down, for a longer period, maybe 10-15 years.

Is there any advantage to forming some kind of JV or other entity, either in getting the bank to approve, or to have a tax advantage for the sellers.

Deal(s) #2 is similar. Somewhat elderly owners of several 6-10 units that they want to back away from the day to day operations of. They do not need the money at all right now. Taxes are a big consideration for them as the unit are mostly owned free and clear, although there is an 'equity line' on at least one of them that was used for other purposes, which could be paid off by them or left in place depending on the benefits of either way. They are in the process of consulting with their tax people also.

These unit are in excellent shape, and in great locations for our relatively small town. Long term tenants are in place of each of them for the most part. On this deal, they owners are very open to somehow carrying a second for at least the down payment portion (30%) and maybe more if it has tax advantages. I have feeling I could get into this one for almost nothing up front out of pocket (maybe 5% or so) and use some of my funds for some of the yearly scheduled maintenance items (they have a 5 year plan of slow upgrades/maintainence items).

What would be the best way to structure something like this, again to get the bank to go along with it, and to benefit all parties involved?

Thanks for the thoughts,

Dan Dietz