Need help building a proper offer

[Steve Riester]

hello again,

i have worked out a 'soft agreement' for seller financing from a sfh seller.

they own the subject property free and clear. asking price is 475,000. Just in talking and building report, seller offered 455,000 because they like me. So i don't really want to offer lower. maybe a little more off contingent to other details of my offer.

Local comps are 490-525k in the area with updates. Subject property is a 1991 build and has never been updated. it is a One Owner and very clean, but dated inside. Inspection report came back with flying colors.

Area rents are $3500, using BP calculator.

They also offered 5% interest, without me asking. I know that ideally they'd like to finance for just 5 years and walk away. I would need longer than that, due to monthly costs. 

Absolutely no other details regarding the deal have been mentioned from either party. We are to talk more on Wednesday, 6/7.

I am not very liquid at the moment so i wondering if i should offer a 30 year with a 5-7-10 year balloon and refi, or interest only for the first 2 years? This would be my first deal and I am looking to buy and hold as a rental.

I thought about pulling 30k from my ira. Giving him 5k as a down, plus 'three months payments' up front, then the balance used for some sweat equity updates.

All IRA money would have to go 'directly" to the property so i cant just hold the funds to use as holding costs, etc, thus the 3 months up front. That would just go down as a down payment as far as my broker is concerned.

Any ideas?? thanks for your patience, i'm still learning this angle.

Steve