Seller financing a property with a section 8 tenant
Hello guys,
I am looking for some advice regarding a potential opportunity in my area for an investment property with a section 8 tenant.
It's a townhome, the tenant in it has been there 7 years and loves the area with no intention of moving and it is in generally good condition.
It appears the property is one of many that this local investor is looking to sell. I am yet to discern his motivations for selling but all his properties appear to have been listed for quite some time.
My intention was to see if the seller would be interested in seller financing the property in the following terms...
$70,000 Seller financing
6.5% interest only payment a month of $310, 5 year term with balloon payment. Current rent is $975 which minus HOA, taxes and insurance would cashflow $375 a month. Do some minor repairs on the property to increase the value, do a 80% cash out refi and pay back the balloon then own the house outright with cashflow.
Now I have to stress, I am completely new to this. I have done research on the topic but have never actually physically done something like this.
My questions are as follows...
- 1) Is this a totally outlandish offer to make? If so, what can be done to mitigate or make it more attractive?
- 2) Is it possible to raise rents on section 8 housing? If so, what does that require?
We don't necessarily have the 20% down payment required that an investment loan/mortgage requires and are trying to be creative with it. We would have enough money to weather 6-8 months of interest only payments in the unlikely event of vacancy.
We would love the advice of some more seasoned investors. Are we crazy or does this sound potentially viable?