Seller Carry for as little out of pocket as possible

[Jared Baker]

Hello BP,

Brainstorming how to purchase my next property and I came up with this idea and I'm curious as to what your thoughts are. These numbers are made up as an example but I have a few properties that are distressed and the owners are in need of getting rid of them due to financial issues. When I says distressed I do not mean run down. Most of the places I have on my list need a little landscaping, or maybe a good washing. Some minor things to make them look nice again. The people that own these properties more than likely fell on some hardships in the last few years and are struggling to make payments now, so the places are not in rough shape at all, they more or less just can't really take care of them now. So rather than letting them fall apart, I could step in and be able to offer them a real offer that they could use to go and maybe downsize a bit or put a down payment down on a smaller place that's more fitting.

The idea is to buy the house at a good deal and be able to come away with as little money out of pocket as possible.

• Home Value is $120k
• Regular mortgage: $96K (80% of $120k) (Purchase$84k;repairs$3k;Taxes/fees$9k)
• Down Payment: $19.2k (20%)
• Purchase Price: $84k
• Seller Carry: $12k

Seller would walk away with $72K in the bank and the $12k carry + a nominal interest would be paid back in 3-5 years.

In the end after paying the back taxes and doing some minor repairs I would be able to walk away with only a few thousand dollars out of pocket to own the place. After updating I would then be able to rent the place out for $1200 a month.

Again, these are made up numbers, I'm just curious if this idea would work or is there something I am completely missing that would prevent me from doing this?

Some might look at this and ask well why doesn't the seller just get an agent and sell to anyone, but most of these places either the owners don't know what to do and will just end of being foreclosed on, or they will get to a point since they are having trouble paying for things that the place will start falling apart and get to a point where my offer at $84k would be great but now a good offer would be $50k and will need a major rehab. I also offer the benefit of being able to provide a solution to their issue immediately rather than dragging out their issue.