HELP - buying a 12 unit property that needs work

[Matthew Poff]

Hello all, I am in need of some advise from all you multi-family experts out there. I have an opportunity to purchase a 10 unit apartment building and a 2 unit house. The details are: Purchase Price = $425,000 Repairs Needed = $50,000 Terms = Land Contract- 7.5% down at 6.25%-20 year am 5 year balloon. Potential Cashflow after PITI, vacancy, cap x, etc is $1,600/month. My issue is that the apartments are in a small town of only about 3,500 people. There is a good mix of some low, middle and high end apartments in this town. The current owner has lost some loved ones over the last few years and hasn’t had the units rented in over 3 years so there isn’t really any rental history. She has started to remodel some of the units and currently 7 of the 12 are rent ready. I should also note that she would be willing to give me some time to make the repairs before making a mortgage payment to her....like 60-120 days. My only real concern is having a good rental pool based on the low population. The nearest large town is about 25 minutes away. Has anyone dealt with this situation in the past or does anyone have any advise? Any help would be greatly appreciated! Thanks!!