Is low down seller financing worth doing a deal you would normally pass on?
I was presented with a deal today that I would normally pass on, but the seller financing at 5% for 20 years with low downpayment (as low as $25k) is tempting me a lot. It is a 19 unit, all 1 bed 1 bath efficiencies. I have not been visited the property and do not know if there areHere are some details:
Asking Price: $350,000 (running the numbers at $300,000 to make cash flow more desirable)
Monthly Numbers (my estimates are in bold, everything else is from the seller):
Rent per unit ~$421.00
# of units 19
Annualized rental income $96,000.00
Expenses:
Vacancy $9,600.00 (10%)
RE Taxes $6,000.00
Insurance $1,500.00
Management $9,600.00 (10%)
Maintenance $9,600.00 (10%)
Utilities $20,200.00
Reserves $4,800.00 (5%)
Operating Expenses $61,300.00 (71%)
Net Operating Income $34,700.00
Debt Service: $1,815 ($25k down, 5% for 20 years)
Cash flow: $1,077/mo
1 year CoC: 51.7%
So, this is a deal I would not normally go for because I don't like the 1 bedroom 1 bath unit mix. But, with the seller financing and low down, it seems like a good deal. What do you guys think?