Buying from a Relative - Financing Ideas

[Greg Shows]

Hey everyone! I am relatively new to real estate investing and very much still in the learning process (I have one rental house at this time). 

I have a relative who has a rental house worth $170K and still owes $80K on the 30 year loan. It has become a burden to them and is not really doing well in their hands. They are willing to sell me the house for $125K. I am interested in buying the home, putting a small amount of money into renovations, and holding as a long term rental for passive income. The issue I am having though is deciding/understanding what the best options for financing are that are most beneficial to both parties. 

My main thought path so far has been to HELOC my rental house that I have built equity in and use that for a down payment on a traditional loan. This will give me a decent cash flow after the renovations, but I believe this will leave my relative with a nice tax burden from the capital gains.

Any thoughts on this idea or other ideas to consider would be greatly appreciated!

Thank you,

Greg