Owner Financed Mixed Use Building with vacancy?
Hello,
A fellow property owner let me know that he has decided to sell.
He has offered to owner finance it to me with a $50k down payment, 7% rate for 20 years.
I'm looking to buy a property like this to be my retirement fund when I get older and I don't need the potential cash flow now.
The building has been cared for, has 4 small apartments on the second floor, two medium storefront commercial spaces and located in a very nice city.
One commercial space tenant just moved out last month.
As it stands right now, it will cash flow negative -$8500 annually.
If I include depreciation, still negative -$2400.
The apartment rents are long term tenants and 25% lower than comps.
The owner is elderly, has owned the building for over 40 years and is confidence that the vacant space will rent soon.
History verifies several months of vacancy, but usually it's rented.
I am concerned and don't want to put myself in a tough spot.
I am very comfortable with residential spaces and own several. Everyone needs somewhere to live.
Not so much with the commercial spaces.
Any advice on taking on a property like this with a monthly loss right at the beginning?
Or if I should even do it?
Thank you!