Creative Financing | Seattle Primary to House Hack

[Karl Krauskopf]

Hi BP Team!

I have a personal situation I'm seeking creative financing from experts on:

• I own a smaller SFR in Shoreline (Seattle suburb), WA in May 2017. My wife and I opened HELOC on and obtained $110k line of credit.
• Of the $110k, we used $74k to buy and rehab a duplex in Spokane, WA in September 2018 that is cashflowing (225k purchase, $2.2k income)
• Leaves us ~$37k line of credit + ~$20k cash

We just welcomed our newborn in January 2019, and my wife plans on continuing to work after 16 weeks off.  Her parents, who live in FL, are planning to move-in with us to watch our daughter while we both work (avoiding $20k+ / year in childcare services plus higher development opportunity in early-life).  In an effort not to go mad, I'm always looking for more creative living situation.  

I came across a SFR in town with an attached ADU that would be able to be rented for ~$1.6k while her parents are not in town (think AirBnB or long-term once they move on) which would be PERFECT both in the short and long term. AP is $524k and is in "as-is" condition (i.e. we'd do most of the fixing while we lived in it).

Question: How can I avoid selling my current primary by renting it out, purchase this new home, and come out on top both financially and socially with the family (no need to answer the latter)?  My initial thoughts are (yet to speak with seller) seller-financing with 10% downpayment + X% interest with a Y-year balloon (let's say 10 and negotiable down to 5).