Seller financing and Subject 2 loans

[Mackenzie Page]

I have some questions about a current investment property I have the potential of getting under contract. Specifically we are working toward seller financing. He is interested.

It's a 4-plex in Denver each unit has 1 bed 1 bath, 650 sq ft, located right off Santa Fe arts district. His rents are $975 for each lower unit, and $1125 for each upper totalling $4200 in rent. Tenants pay utilities. Needs some curb appeal, and some updating but I don't know the extent of it as I haven't visited the property.

He wants the mid-600k which would leave him netting mid 500s. However since he has owned it since '93, used most all depreciation, he will be in a high tax bracket. This is my angle for seller financing. He will net more over time. I'm thinking a 5-7 year plan with a balloon at the end which we would then take on the rest with a conventional loan. 

He would like us to keep some of the tenants in place and slowly either raise the rent or terminate leases as we slowly renovate each property. We would be doing the renovations ourselves and paying for them out of pocket. This would mean starting the seller financing with his numbers.

We are interested in taking a seller financing route because 1. we do not have the income to approve for a loan upwards of 600s, 2. we thought that he owned it outright but yesterday he mentioned that he has a mortgage of around 140k. (I think he took out some equity). Now we are looking into subject 2 loans. 3. I have no idea how a hard money loan would work in this situation.

In general, I have found myself in a quite complicated opportunity, but an opportunity nonetheless. I am going to see the property on Sunday and need to know my numbers and to begin that seller financing conversation in earnest.
I am interested in other routes but not sure what my options are.  Anyone have any advice? definitely over my head with this one.