Updated almost 7 years ago on .
Creative financing, will this strategy work?
I'm looking for help analyzing this creative sale arrangement. What are the tax implications? Is this violating any sort of securities laws? Feel free to poke holes or shred the idea apart, just please provide the legal/logistical reasons for the issue. Thanks!
Proposal:
The property is presently valued at $140,000. ARV $250,000. The buyer pays the brokers fees and get added to the title. The property is financed at 65% of present value. The buyer pays the bank fees. $70,000 is paid to the seller. $21,000 is used for renovations, repairs, and stabilization. The buyer oversees all management, renovations, and operations. The property is stabilized and refinanced at 24 months. The seller is paid the other $70,000 plus $20,000 for remaining on the loan during the 24 months. The seller is removed from the title and not on the new loan. The seller receives a total of $150,000.