Seller Financing Terms and Negotiating using Tax Benefits

[Brendan Lee]

Hi All! I recently got under contract with a triplex and the seller accepted my offer to finance the 25% down payment. Thus 75% will come from the bank and 25% will come from the seller. The plan is to BRRRR this property to help cash flow better as the rents are very low because of the finishes of the property. But I do want to have 0 cash after BRRRing. I'm figuring the seller financing will help with this but I still need a low enough seller financing payment to make it cash flow well each month.

My main question is does anyone ever pitch the seller a lower interest rate and a higher principal so that the seller can make it long term capital gains instead of short term whilst also spreading out the income over a longer period?

Details of the sale:

-$45K would be seller financed. In order to cash flow well I was hoping to spread this out over 15-25 years or do a balloon payment. Is this typical?

-My goal would be to tell seller that I would repay $50K instead of $45K. I know its a super low interest rate but I'm figuring by spreading out the income and increasing the principal of the loan the seller won't have short term cap. gains (because there's no interest on paper) and he will not have to pay as much in income tax all in one year.

-The seller is retiring so he mostly just cares about getting "mail money" each month.