How would you proceed? (Hoarder seller financing deal)

[Michael Ramirez]

Hey there BP, hope you are all safe and healthy.

So this is my first post, and it just so happens to be with questions about this potential deal I am developing for a rental property.

I've developed a relationship with a woman willing to take a lower payment for her property with higher tax rate to keep her tax implications low and have residual income longterm. This is from a property she owns free and clear except a few years back taxes. Those taxes next year will pass almost 30k

The house has really solid bones and a few upgrades have been addressed already like the roof and some plumbing issues. The downside is this place is trashed. All the floor boards are swollen from pet droppings and theres a stench from it along with her being an indoor smoker. All in all she "cant handle the tax implications" from lump sums, and has some non family members shed love to help. Anything past this I'll will answer as best I can in the comment section.

-Where: San Diego CA

-What: 990 sq ft 2/2 with detached garage intended to be made into a 2/1 ADU (adding up to 800 sq ft)

-Unappraised realtor.com value: 500k

-Her word of appraisal from who knows how long ago: 640k

-Breakdown of price per sq ft of neighborhood is 343 median

(343x1790= 613k)

I'm not sure how it may effect the appraisal but this property is 1-200k cheaper than its neighbors.

When I divided the price by square from from realtor.com it came down to $504 per square foot

-Offer: 300k at 3.75 for 40 years =579k after interest and principal.

-Monthly PMI: $1207.58

That's what I can think to share so far but will gladly share any details I may have left out that can be helpful.

What I'm wondering are a few questions on the possibilities.

1. After entering into the seller financing deal, can I use the equity in the property to take out a heloc or home equity loan to cover the repairs and improvements beyond our finances?

(We will have enough to cover the cosmetic stuff between savings and sweat equity)

2. As the buyer in that agreement can I then deduct my operating expenses, mortgage interest and property taxes?

3. If I needed an investor to fund the rehab can I refi out enough to make the lender whole plus interest, and maintain the original payment agreement with the seller? (The thinking was private money to fund the rehab get it appraised and then refi out the lenders funds plus some safety net money then pay them at the same time)

4. Can you setup the seller financing terms to become inheritable? (After the person passes the non family members she wanted to care for recieve the payments from then on)

I'm sure ill think of more but for now this what I can put together.

Thanks everyone