Any ideas on how to make this deal seller finance work?
Member since 2021 · 33 posts · 13 votes
Any ideas on how to make this seller finance deal work?
Duplex in West Allis, WI
(2) 3 bed/1 bath, 1750sqft
Current Rent: $925/m each (market rent about $1100/m)
Taxes: $3900/year
Sale price seller wants: $230,000
Seller mentioned wanting a 4.5% interest rate. He also is open to interest only for first 3 years.
All the numbers I ran do not seem to allow me to cash flow much with that sale price and interest rate when factoring in insurance($150/m), garbage ($150), prop mgmt(8%), capx (5%), vacancy (5%)
Any ideas on how to make this seller finance deal work?
Duplex in West Allis, WI
(2) 3 bed/1 bath, 1750sqft
Current Rent: $925/m each (market rent about $1100/m)
Taxes: $3900/year
Sale price seller wants: $230,000
Seller mentioned wanting a 4.5% interest rate. He also is open to interest only for first 3 years.
All the numbers I ran do not seem to allow me to cash flow much with that sale price and interest rate when factoring in insurance($150/m), garbage ($150), prop mgmt(8%), capx (5%), vacancy (5%)
Good advice. Do you think this is not a deal?
I don't know that market but from a numbers point of view, if it doesn't allow you to cash flow there is a problem. If you raised rents to market at $1100 per unit, and ran into a vacancy that loses you two month's rent (while tying to fill or an eviction), etc - that is a projected loss of 2 * $1100 for $2,200 and setting aside 5% for vacancy is $1,320 - not a disaster but you should be in it to be profitable.
If a refrigerator, AC Unit, water heater, etc should need to be replaced, will the 5% cap ex cover it? What if there are two occurances in a year? How stable are the sewer system, roof, electrical, water?
Is it a decent neighborhood that is stable or a transient one? Too many unknowns on my end but if it doesn't cash flow, the odds are against success.
Any ideas on how to make this seller finance deal work?
Duplex in West Allis, WI
(2) 3 bed/1 bath, 1750sqft
Current Rent: $925/m each (market rent about $1100/m)
Taxes: $3900/year
Sale price seller wants: $230,000
Seller mentioned wanting a 4.5% interest rate. He also is open to interest only for first 3 years.
All the numbers I ran do not seem to allow me to cash flow much with that sale price and interest rate when factoring in insurance($150/m), garbage ($150), prop mgmt(8%), capx (5%), vacancy (5%)
Any ideas on how to make this seller finance deal work?
Duplex in West Allis, WI
(2) 3 bed/1 bath, 1750sqft
Current Rent: $925/m each (market rent about $1100/m)
Taxes: $3900/year
Sale price seller wants: $230,000
Seller mentioned wanting a 4.5% interest rate. He also is open to interest only for first 3 years.
All the numbers I ran do not seem to allow me to cash flow much with that sale price and interest rate when factoring in insurance($150/m), garbage ($150), prop mgmt(8%), capx (5%), vacancy (5%)
Good advice. Do you think this is not a deal?
Any ideas on how to make this seller finance deal work?
Duplex in West Allis, WI
(2) 3 bed/1 bath, 1750sqft
Current Rent: $925/m each (market rent about $1100/m)
Taxes: $3900/year
Sale price seller wants: $230,000
Seller mentioned wanting a 4.5% interest rate. He also is open to interest only for first 3 years.
All the numbers I ran do not seem to allow me to cash flow much with that sale price and interest rate when factoring in insurance($150/m), garbage ($150), prop mgmt(8%), capx (5%), vacancy (5%)
Good advice. Do you think this is not a deal?
I don't know that market but from a numbers point of view, if it doesn't allow you to cash flow there is a problem. If you raised rents to market at $1100 per unit, and ran into a vacancy that loses you two month's rent (while tying to fill or an eviction), etc - that is a projected loss of 2 * $1100 for $2,200 and setting aside 5% for vacancy is $1,320 - not a disaster but you should be in it to be profitable.
If a refrigerator, AC Unit, water heater, etc should need to be replaced, will the 5% cap ex cover it? What if there are two occurances in a year? How stable are the sewer system, roof, electrical, water?
Is it a decent neighborhood that is stable or a transient one? Too many unknowns on my end but if it doesn't cash flow, the odds are against success.
Any ideas on how to make this seller finance deal work?
Duplex in West Allis, WI
(2) 3 bed/1 bath, 1750sqft
Current Rent: $925/m each (market rent about $1100/m)
Taxes: $3900/year
Sale price seller wants: $230,000
Seller mentioned wanting a 4.5% interest rate. He also is open to interest only for first 3 years.
All the numbers I ran do not seem to allow me to cash flow much with that sale price and interest rate when factoring in insurance($150/m), garbage ($150), prop mgmt(8%), capx (5%), vacancy (5%)
Good advice. Do you think this is not a deal?
I don't know that market but from a numbers point of view, if it doesn't allow you to cash flow there is a problem. If you raised rents to market at $1100 per unit, and ran into a vacancy that loses you two month's rent (while tying to fill or an eviction), etc - that is a projected loss of 2 * $1100 for $2,200 and setting aside 5% for vacancy is $1,320 - not a disaster but you should be in it to be profitable.
If a refrigerator, AC Unit, water heater, etc should need to be replaced, will the 5% cap ex cover it? What if there are two occurances in a year? How stable are the sewer system, roof, electrical, water?
Is it a decent neighborhood that is stable or a transient one? Too many unknowns on my end but if it doesn't cash flow, the odds are against success.
Does he want nothing down? And with the 10 year term he still wants interest only on the first 3 years?