Little help on putting together an owner financed deal?

[Alex Johnson]

Looking for a little help on the nuts and bolts of putting together an owner financed deal.  A friend's parents have been retired for about 5 years now.  They own a small 3/2 outright and have been renting it to the same family for 15 years,.  They just found out the family will be moving out in 3 months and are thinking about selling it to be rid of the hassle of managing it.  They aren't in a place where they necessarily need the cash at the time so I approached them with the idea of owner financing it and they liked the idea.  They have been renting it at about 30% under market value so there is room to bring it up to market.   Its also mostly rent ready and is in a stable neighborhood with access to good schools.  Think starter homes in the upper 100's...

So I am looking to put a deal together and would love any tips or recommendations from those that have done something similar?  In particular, what kinds of terms have worked for you in the past. They are in their late 60's so a 30 year note probably wont be too appealing.  I was thinking in the neighborhood of 15-20 years at 5% or possibly a balloon payment if and when I sold it?  

How have you sold the idea to an owner to sell to you under retail value instead of  putting it on the market and trying to get asking price? (avoiding closing costs, interest payments over time increasing overall take home, avoiding taxes, etc.....).  Even though its a great way to get into a property, I still need it to be a good deal and under retail....

And more on the nuts and bolts side of the deal.  What kind of paperwork did you use for the agreement and did you involve a lawyer?  The deal will be in North Carolina so not sure if there is anything specific that must be included.  Did you use a basic amortization schedule you found online to determine monthly payments and repayment?  Did you put any additional clauses in the agreement that have worked well for you etc....

As you can see Im starting with a blank slate and have a ton of questions, so any and all input is hugely appreciated!

Thanks so much, you all rock!

Alex