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Updated over 2 years ago on . Most recent reply

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33
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Aidan Birmingham
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33
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Any ideas on how to make this deal seller finance work?

Aidan Birmingham
Posted

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%)

Most Popular Reply

Account Closed
  • Investor
  • Scottsdale Austin Tuktoyaktuk
4,163
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Account Closed
  • Investor
  • Scottsdale Austin Tuktoyaktuk
Replied
Quote from @Aidan Birmingham:
Quote from @Account Closed:
Quote from @Aidan Birmingham:

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%)

Some deals aren't "deals" at all and just don't work.

 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.

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