Thinking outside the box. Interest only?

[Nick Bleser]

I recently attended a local REIA meeting and they were talking about investors should try to always think outside the box. So here's my idea that I would love to hear others opinions on.

There is a tri-plex being sold in my area in great condition and I'm trying to think of ways to make both the seller and I happy. The asking price is $149,000 and the rents total $1650/month. My numbers don't come close to this working plus I only want to put $10,000 down.

So let's assume the seller is ok with owner financing. If I offer $100,000 w/ 10% down interest only for 3 years with a 7% interest rate the owner would receive $35,200 after 3 years. Then agree to a new 5 year loan at 7% ammortized at 20 years. That means after five years the seller would get $29,500 in interest and I've paid down the loan to roughly $77,000. I could then find a traditional loan or sell and the seller ends up getting the price they want. This would of course assume the seller agrees to be in a relationship for at least 8 years.

Is this deal juicy enough for a seller? Is it even legal? I also would imagine this would create less of a taxable event for the seller.

Thanks in advance for the feedback!