Land Contract or Seller Finance - Family Involved

[Mike Wood]

I am looking for the best way to structure a rehab/flip deal, and am considering a Land Contract or Seller Financing.  I am looking for advise.  Below are the details.

A family member has a SFR that they have owned for over 10 years in Florida, which is owned free and clear. They have always rented it, and recently evicted the tenant. The evicted tenant has left the house in less than stellar condition, which would require a decent amount of work to return it into rental service. That work and money has left the family member less than thrilled with the property and they want to get rid of it.

I am interested in taking control of the property and rehabbing it so I can sell it.  This would be my first rehab/flip, as I am a buy/build & hold investor.  The numbers look like I can make decent money on the flip. My issue is I don't have the capital to purchase the property, nor do I want another mortgage to show up on my credit (I am working on a two house new construction deal separately), but I have the required capital for the rehab.  The scale of the project is house purchase of $100k, rehab of $20k.

I have had discussion with the family member and we are in agreement on the purchase price.  What I would like to do, is take control via land contract or seller finance (zero money down, balloon payment of purchase price in 12 months or when sold). Once I have control, I would put up all the money for the rehab, finish the rehab and sell it. With the proceeds of the sale, the family member would be get paid off the agreed purchase price.

How should I structure this deal?  Given it family, I want the arrangement to be very clear so there is no misunderstandings.  Thanks.