How to Structure My Creative Finance to Purchase a Duplex

[Brandon Johnson]

I found a deal in my local market here in Baton Rouge where a seller is willing to sell his duplex, that is not currently on the market and he is open to possibilities of carrying a note for a small portion of the purchase price that would reduce my down payment.  This would be in addition to the primary mortgage for the 75%-85% of the sale price that I imagine would come from a small local bank.

His asking price is $125,000 for a duplex that rents for $875 & $895 on two 3BR/2Bath units totaling 3000 SF.  Not exactly the 2% rule, but my analysis shows I should cashflow at least $500/month under 100% financing under several scenarios I evaluated.  Coming up with down payment funds is my biggest roadblock which is why this deal appeals to me even though it is not a 2% rule type steal of a purchase price.  He cannot owner finance the entire deal because he currently has an outstanding mortgage on the property that must be settled in the sale.

The seller and I have not discussed yet what the terms of the seller financed portion would be because my biggest uncertainty is the question of how do I present this to the bank?  Are there banks open to providing a new mortgage for a property where the seller is providing a large portion of my down payment in the form of a note to me?  Is this only done on commercial transactions?  Does anyone have any recent experience structuring a deal like this? I know @Ben Leybovich is the creative finance expert and I would be grateful to have his input here.

Also is Lending Club a good option to get my down payment money?  Would a bank have a problem with me getting my down payment funds that way?

Thanks in advance to the Bigger Pockets community.

Brandon Johnson