Creative financing structure/tailoring

[Jeffrey Alan Slachetka]

Good morning, everyone,

I have an opportunity that seems ripe for a creative deal structure. I’ll provide an overview of the situation and my thoughts/attempts on how to structure the deal.

Owner: He is in his 70s, payed off asset, appreciates the return profile of his property but is no longer interested in the management and hassle aspects.

Details: Before I even asked, he mentioned that he isn’t sure where he stands in terms of depreciation and is somewhat concerned about the tax implications of selling.

My initial approach to discussing creative financing:

Me: "Have you heard of or would you consider seller financing? This could help with sales and capital gains tax."

Seller's response: He said, "Yes, I have heard of a land contract, but I’m kind of hesitant because I know some locals who land contracted their assets and ended up with a distressed property after a few years. However, I might consider seller financing if there is a substantial down payment."

[Joe Villeneuve]

Quote from @Jonathan Greene:

Where is the rest of the discussion? What did you say in response to that? You need to know two things next:

1. What does he consider a substantial down payment and does he know that he has to pay capital gains on that down payment instead of just on the payments?

It sounds like there is a tenant in there. Where is the tenant going? What is the rent in terms of market value?

2. What is your plan for the tenant? Do you want it vacant or occupied?

Both questions were the first things I thought of too.  I love seller financing.  This is the perfect situation for this.
A third question would be, "is this his only property, and if not, are the other properties also paid off?".  Ok, two more questions.  If the answer to both added questions would be "yes", then you have a potential goldmine here.
Combining the seller's concerns, and the reality of a big down payment being a negative to the seller (see Q: 1), you should be able to set the terms, with a lower DP, and controlled interest rate, to have this property CF and,...be able to sell the package to another REI down the road,...as long as you buy this using an LLC (a new one).