Creative (Or Maybe Not?) Selling Prices for Loan - Issues?

[Matt F.]

Hi,

I am eager to begin investing in multifamily real estate for the long-term cash-flow, but lack any significant capital to do so, especially in my area (Los Angeles).

I've been trying to think of creative ways to acquire my first couple of properties.
Here is one of many ideas. I'll probably post the others after seeing how this goes.

Please take the time to point out any potential issues you see with my logic. I greatly appreciate all feedback and advice that more experienced individuals have to offer.

*I can get approved fairly easily for a loan with favorable terms at 65% LTV. The seller does want cash, but does not NEED 100% cash today. Why not have the seller agree to sell the property at 60% of value to a newly formed partnership that takes out a loan for 65% LTV. The seller will have a stake in that newly formed partnership (reason for selling at 60% value), giving them access to a portion of the cash-flow until they've been paid out say 110% of their asking?
I kind of took this idea from the "earnout" concept when purchasing a company.

I may be forgetting something crucial here, but if that is the case, guide me in the direction I'm trying to go please.

Perhaps such strategies aren't uncommon amongst investors, but they sure aren't used by the average person.

Thanks,

Matt