Using a HELOC for Down Payment On a Seller Financed Property

[Zachary Lunden]

I purchased my first house about a year ago and am trying to figure out how to finance my second purchase. 

My plan so far has been to find a multi-family property that the owner will consider carrying the note on and take the equity out of my current home with a HELOC and use that as a down payment and have them carry a note.

I have been talking to a local credit union that preliminary told me that they would be able to provide me with a HELOC of about $140k @ 4.5% variable.

A few questions for the community:

1) How have you structured seller financed deals in the past? Is it reasonable to think that a seller would go for a 20% down and carry a 3 year note with prime + 2 interest only note with a balloon payment? 

2) Do you have any recommendations on how to structure the deal?

3) Ideally I would like to refinance the property into a 30 year fixed (if it is 4 units or less) or a commercial loan as soon as possible. How do banks look at this? I would like to be able to refinance and pay off the owner and as much of my HELOC as possible (most of the properties I am looking at have value added potential).