4 House Contract Sale Advice

[Kelly Wiggs]

I have the opportunity to purchase 4 houses on contract and was looking for input before pulling the trigger. The 4 houses are all on the same street, built in the 1930s, mechanicals function, however there will be some upcoming deferred maintenance. 2 of the house are currently rented; 1 new tenant 18 month lease, other just renewed for 12 months and has been there since 2016. The two vacant houses need about 5k to make ready. 

Seller said he would carry at 6% for 10 years with a ballon at 5 with following terms:

Purchase Price $131,600

Down Payment $30,000

Gross Monthly Rents $2,670

Monthly Payment $1,128

Taxes $317 month/$3,800 annual

Insurance $150 month/$1,800 annual

Balloon at 5 Year: $58,345

Plan is to rent all 4 and take to bank and pull out cash within 1-2 years to pay off seller. I think the numbers look pretty good. I'm considering asking him if he'll lower the rate to 5% if the down payment is $40,000. That would make the payment $972 and balloon $51,483. 

I'd appreciate any thoughts.

[Hai Loc]

Looks solid but $35k a pop = D/war zone?

You should incorporate 25% for PM, vacancy and Capex at least.. which will still live you in the green