Structure advise for seller financed wholesale deal

[Adam Boonzaayer]

Hey everybody,

Here's what's going on: I have a motivated seller who has agreed to seller finance a duplex they own (not owner occupied). Terms of financing are:

Purchase Price: $31,500 

Down Payment: $1,575 

Monthly Interest Only payments of $149.63 for 36 months

Balloon of $29,925 due in 3 years

(Side note: is a good deal for a buyer? Rents are $450 and $475, I think market would support $500. Tenant pays all utilities except water/sewer/trash which is about $70/mo for both. Needs about 8k in exterior repairs. ARV about 40-45k)

BUT the seller has a mortgage balance of 36k

Bought it 11 years ago for 48k

Interest rate on the note is about 7%

Since the purchase price is less than the mtg amount what is the best way to structure the financing for the buyer? Since I'm going to take a wholesale fee conventional is out right? Is subject to still an option? Land contract? 

What would you do??

[Mitch Messer]

Hey @Adam Boonzaayer. I don't see a deal here at all. These folks owe the bank $36K and the property appears to be worth no more than $20-30K on its best day. They are officially underwater.

No way would I as an investor pay them a $1575 down payment. Down payment on what? They have no equity!

I'd run (fast) from this one!