Opinions on a Very Creative Financing Idea

[Cody Thompson]

So I'm working on my first real Estate deal. The seller is someone I've known for a long time and we are going to work out a seller financing option next Saturday.

I don't know if anyone has ever done a deal like this so I would like some opinions.

So she expressed a starting point 260k. My idea is to sell her on a purchase price of more like 130-150k but with something high interest rate like 10%. Her main concern is to get around 1200 a month since thats what she earns currently on it. So my thoughts are to do a low loan amount with a high interest for on what would be a structured like a 30 year mortgage but then after 5 years it would go to a 10 year mortgage with a lower interest rate. So essentially she would still get around 1200 a month for the life of the loan. And I would pay it off in only 15 years. While the first 5 years I would have huge interest write offs.

What is everyone's thoughts on this?

[Cody L.]

someone would be crazy to accept a lower sales price just because they were getting the same payment. You could refi and they'd be hosed. 

Likewise I wouldn't pay double for a property just because the seller could get my payment down by doing interest only or some 50 year am. 

But if you can "trick" her by focusing on payment amount only more power to ya I guess.