Is There A Way To Do Seller Financing On This Deal?

[Darren Budahn]

I have a chance where I may be able to obtain a duplex from a very good friend of mine. His sister-in-law unexpectedly passed away about a month ago unfortunately. My friend was named executor of the estate. He asked me if I would be interested in buying it from the family since he knows I am getting into REI. The family does not want to put it on the market if they don't have to.

The duplex is in a great location. It is in excellent condition with long term tenants. It was bought in 2007 for $195,000. It's current value is probably between $170,000 and $180,000. The balance on the loan is $145,000. It brings in $1,850 a month in rent with tenants paying all utilities minus water. My question is not if the deal makes sense from a cash on cash perspective or anything like that, but rather is there a way we can structure a mutually beneficial deal for both parties whereby I would not have to get traditional bank financing and put down 25%?

I only have experience buying my personal residence and one investment property both with traditional bank financing. I know the loan is not assumable, but is there any other way to do some kind of seller financing in this scenario? I would be willing to pay my friend the difference between the property's fair market value (let's say $170,000) and how much is left on the loan ($145,000). In essence, this would be like a $25,000 down payment. However, I just don't want to go to a bank and have to put down about $40,000 plus for a down payment. Can I do subject to financing in this scenario where the owner is recently deceased? I'm guessing not, but my friend and I were both trying to figure out something that would work for both of us. I am aware of the Due on Sale Clause in most traditional loans, but I would be able to refinance with no problem if the bank called the loan due. Also, even though we are very good friends, we would certainly have attorneys due all paperwork if we had a deal that made sense. Any thoughts or suggestions would be appreciated?