​How would you structure this deal?

[Pyrrha Rivers]

Hello BP. 

I had a family friend approach me wanting to sell a town home he had as an investment property for a few years. He has fallen on hard times, the house is in a nice neighborhood but in need of repair and the owner is in need of money.

Here are the numbers:

Price $43K (to pay off the loan).

ARV Here is what I've done to try and figure this out. Not many sales in the area and just a couple similar properties within the past 6 months.

County assessed value $47K

Taxes $1160

Comp #1 sold 2 weeks ago for $67K (No interior photos)

Comp #2 sold for $76K in June (Average rehab).

Comp #3 currently on the market for $95 not yet sold 34 days listed, so it may have to be reduced to sell (Rehab was beautifully done).

Based on these comps I assigned a conservative ARV of $67 to stay in line with the lowest comp.

Owner says it will rent for $750 - $800. Rentometer says $995. I use $800 in my calculations because the home does not have a garage and the bedrooms are small.

Now here is my brainstorm but fear that what I am thinking may not be legal, so I need some guidance.

• Purchase price is $43K
• I can get a loan for a minimum of $50K
• Can I pay $50K and get $7K in concessions from the seller? (I’m thinking this is not legal and if so want to stay clear from it, but I’m not sure).
• These concessions can be in the form of closing and repair costs to reduce my out of pocket expenses.

This will allow the seller to receive his sale price right away and will allow me to purchase the property for $10K down plus repairs and have a tenant pay for the house.

If I can’t get the concessions and don’t want to use hard money, what can I do?

How can I structure an owner financed deal? (I guess could fix it, wait 6 months and refinance to pay off the seller. How much of a down payment should I offer in that scenario since I have to complete the repairs and wait for the cash?)

Thank you so much for taking a look at this and helping me figure it out.