How to structure seller carry no money down deal?

[Timothy Howdeshell]

How would I, or should I, structure a deal to involve no money down? I am the buyer in this situation. 

Example:

ARV = 130k

Rehab needed = 15k 

Purchase price = 80k

Current/As-is value = 96k

The seller has said they would consider doing a seller carry. The property is also tenanted at the moment.

My guess is to get a mortgage for 60k with a 20k seller carry. Then once the tenant moves out I can use hard or private money to fix up the property then do a cash out refinance to pay off the seller. 

Does this sound reasonable/correct? 

Thanks in advance for any help you guys can provide! 

[Jeff Cichocki]

@Timothy Howdeshell,

Unfortunately, the scenario you paint won't work for most HML's. Lenders want to be in first position. If the HML is willing to do the deal, they'll want to take out the first mortgage and the seller. They'll want the whole thing. If that works for you, you'll be able to refi into something else after.

The basic numbers you quote are good for LT financing, but will be difficult to get 100% covered by a HML. Most HML's want you to have some skin in the game. This usually comes in the form of some sort of financial participation from you. I'm not sure there's a way around it using HM.

However, if you can find a private lender, you may be able to pull it off. You should still give them 100% of amount financed (risk is exponentially greater with every position behind 1st the lender gets). You want your lender to be safe and secure.

As a side note... Have you asked the seller if they would lend you the money to do the rehab? It's not common, but I've seen it done.

Good luck!