In addition previous owners will never give up their personal attachment to the home and will make for a very difficult landlord/tenant relationship.

I don't have a lot of cash right now so getting a conventional loan on the properties would be difficult and I'd like to avoid partnering with someone if possible.

I've recently talked to about a dozen local banks and credit unions, and it was difficult to find one that offered a LOC on an investment property. 

If they specifically need to cash-out to buy another home than seller financing is often DOA.As mentioned, if the have a balance on their underlying mortage- If they want to pay it off it might require a big downpayment- It is possible to leave it in place with a Wrap but that is an advanced strategy and while fairly low risk, the due on sales clause is a concern.On interest rate, my experience is that a seller finance buyer usually has to pay a few points above the going interest rate for conventional/FHA lending so probably closer to 7% these days although it never hurts to ask for lower...All of this is theoretical so the advice to chat with seller to get more information is the right next step.Jeff

Loan balance is $175k at end of year 3.Assume sale price is $300,000 in year 3. 6% commission paid.Projected Gross Rent: $2,000 per monthProjected CF Y1: $6,000 (DIY PM, 0% vacancy)0% vacancy is to keep this simple.

Since the rate is higher and adjustable you don't want to keep a balance for very long. 

However, it seems like a difficult feat in this market with housing prices so high and the scarcity of multi-family units in the area.For those not familiar with the northern Virginia market, 2br condos go for 450k-500k and rent for $2800.

Account Closed  now to be like Fox news fair and balancedone does have to be mindful that banks can change policies.. so you do need in my mind a healthy balance of private capital or your own and banks or other lenders as well.07 to 09 saw banking FREEEZE for us in the business I had almost 30 million in various credit lines out and they all got called Save one.. my core bank kept my 6 million working with out it I would have not made it.. the rest did not care and I had written into my loan terms that if they called these facilities I had 36 months to pay them off and I needed every bit of that time to do it.. but I can proudly say I did not default on a one and paid it all back and the agreed on interest. 

It shouldn't be that difficult to structure a deal when seller will finance half.

There needs to be a balance that both parties are comfortable with.