I need Advice on Seller Financing to Acquire a Rental Property.

[Jarred Black]

Im looking to get some advice on a deal I have. I'm not sure if my plan is even possible so I would appreciate any feedback.

I have a well kept 3bed 1bath 950sf single family home under contract for 16K with an out-of-town seller. Instead of wholesaling it, I'm actually wanting to purchase the property because its in such good condition and it rents for 600-650. The house does need a new hot water heater, outdoor A/C unit, stove, refrigerator, carpet and paint, and some cosmetic upgrades = $3500-4000. I already have a qualified tenant that wants to live there. I was thinking of entering into a bond for deed or lease option with the seller, then sub-leasing the home to my tenant. I would use the rent to pay my seller and collect the cashflow. After a year, I would be in a much better position to finance the property and purchase it from the seller while keeping my tenants in place.

I would initially propose the same 16K sale price, 350-400/mo rent (considering the necessary repairs I will need to make) and 100% of rents going towards the sale price. (I understand this will be negotiated with the seller and I) Once I have a signed lease (option), I would then make the necessary upgrades and sublease it to my tenant for atleast a year. After that year, I would exercise my option to buy and purchase the home for the remaining balance.

I understand this is all subject to the terms I can negotiate with the seller.

I'm looking for any feedback. Are their any holes in my plan or anything I am not accounting for?