HOW TO STRUCTURE A WIN-WIN REAL ESTATE DEAL

[Reggie Stallings]

Hello everyone,

I need some sound advice. I have been fortunate enough to have a family friend reach out to my wife and I about becoming first time home buyers. I am currently renting and my rent is $1260. Looking at homes in the $225-$250k price range. Getting a loan is not a problem for us but saving up 20% down payment right now has been for the past couple of years. We've knocked off debt from our dumb college/post college years. So after paid down massive debts and raising two kiddos and one more on the way. Our focus was on that. 

The family friend that is helping us out will buy the house outright and if needed. Pay for any improvements. They have done this before for their son and would like to do the same for us. The reason why they are doing this for us is because they had a CD that came due plus their other investments are volatile in the market and feel as if they can get a better return in real estate. They want a minimum of 5% return and do not want to become long term investors/landlords. They are looking to invest between 3-5 years. Within that time frame I will have the 20% capital saved for a down payment. 

Even though this is a family friend. How do I protect myself legally from them selling the property within that time frame and protect myself from appreciation in the future if the home gets valued higher than what I am comfortable of paying? Any ideas or has anyone done something like this before? I've read Brandon Turner books, J Scott books and it talks about seller financing, lease options, private money.