Help: Creative Owner-Financing Solutions Needed

[Steven O.]

Hi BP,

The seller of our current home wants to sell it to us (he’s moved out of state and no longer wants to deal with responsibilities of being a landlord) and we’re looking for creative owner-financing deal structures to maximize the outcome for both buyer and seller. Owner will not put the property on the market or consider selling it to anyone else.

Details:

• ~$1.4M home price located in Los Angeles
• Seller owes $350k on the home
• Seller is in his mid 70s and is only looking for fixed monthly income out of the deal
• Property will be purchased and occupied by 4 individuals (2 married couples) - think of it as a duplex. It will be all of ours first home.
• We’re very friendly with the seller and both parties are interested in a deal that puts more money in the seller’s bank account, monthly and saves us buyers in the long term (ie: minimize taxes on the sellers side and minimizes loan interest paid on the buyer’s side as well as frees up down payment to be used on improvements)
• Seller will consider a “0 down, 0% interest loan” with a higher sale price (let’s say, $1.6M).

Initial Points of Consideration

• Could the seller sell it to us at a “loss” so that no capital gains are owed on his and then we gift the seller our monthly payments ($5k/month for ~27 years) - so that no income tax is owed (being 4 owners, we could gift the seller ~$60k/year)?
• Could the seller sell us us the house for $1 (or gift it to us entirely) and we repay him in monthly “gifts”
• Would it at all be advantageous to enter into some sort of “lease to buy” agreement and then be willed the property upon the seller’s death (he would write us into his will)? Then, at the point of his death, we would continue to pay what’s owed to the seller into a family trust of his, via monthly payments.
• What type of legal entities should we consider operating within as the buyers?

Main point is that we have a great relationship with the seller and both sides are extremely flexible in terms of creating an agreement that is mutually beneficial - thought neither of us have ever done anything like this. I will definitely consult my CPA and real estate attorney but wanted to reach out here to get some ideas started.

Thanks in advance.