Apartment deal structure
I'm looking at a building and the seller is offering financing of a portion of the deal. he's listed it at 2.1M. After running numbers on it and padding them to what I feel would be a real world number I'm coming to a value of 1.8M. Gross rents at 221,000 annual with expenses at roughly 100k (he's listing expenses at $57k). My question is in the structure of the deal based off my numbers.
Based on conversations with the broker he feels that's where the seller is trying to land (1.8M) which I have no issue getting him his money. Write the deal at 1.5M with seller carry back of $325,000. After year 5 do a cash out refinance and return his money and the additional 325k (A portion of the equity) This would net him the 1.8M plus the interest I pay.
Am I thinking properly? My goal is little to no money down. Am I reaching here? This would help me in achieving the goal of turning the building around. it's not falling apart , but could use some fixing up on the insides to bring it up to market rent potential. I think there is a lot of upside for sure.
Thanks guys and gals
feedback welcome on the structuring side.