Creative Financing options for potential deal

[James Berry]

Hello BiggerPockets community!

I have a unique opportunity to acquire some real estate and am not sure how best to structure the deal.

I’ll outline the opportunity bellow, then present the outcomes we’re looking to achieve and provide to the seller.

I’ve considered some creative financing options already, but am new to this level of real estate investing and would appreciate any advice this community could provide.

OPPORTUNITY

- 115 acres adjacent to property we currently owned. (e.g. contiguous)

- Comprised of 4 parcels:

P1 - 70 acres with 2250sqft 200yo house and 20yo barn.

P2 - 35 acres with under conservation easement.

P3 - 5 acre minor sub division home lot

P4 - 5 acre minor sub division home lot

SITUATION

- Seller is 70yo and retiring in 2019

- Seller has heIrs who are absent and uninterested in owning the property (will eventually sell inheritance)

- Seller is a frIend and neighbor of the famIly

- Seller (and our famIly) have preservation/non-development hopes for land in the neIghborhood

OUTCOMES

For the Sellers:

- Immediate cash lump sum (property needs some work)

- "Guaranteed" monthly/annual payments for deal term

- Retain ownership and occupancy of real estate until they vacate

- Seller retains ownership if buyer defaults

- Continuity of neighborhood legacy

For the Buyers (us):

- Acquire property rights

- Fixed sale price

- Known caretaker/occupant

- Continuity of neighborhood legacy

DEAL OPTIONS

- $450-500k sale price

- 10% down

- 20 year term

- 0% Interest

- Land Contract

This seems like a good option to consider in terms of managing tax impacts to both parties, but at the cost of fewer “ownership rights” for both parties.

- Seller Financing

This seems like a good option to consider in terms of better “ownership rights” for both parties, but at the cost of trickier tax implications. (Imputed Interest, etc.)