Requesting Recommendations for Setting up a Seller Finance Deal

[Cheryl Craigo]

I am working with on a lead to purchase a for a 950 sq. ft - 2/1 Condo with seller financing. The current Owner, is a friend, who holds the property free and clear. They no longer live in the property and does not want the "inconvenience" of being a landlord. The property is currently costing the Owner $142/mo in property taxes and $350/mo on HOA fees. Total monthly outgoing costs is $492/mo.

The property has not been upgraded since 1980. It is livable however; needs a kitchen, bath and interior finish upgrades. The Owner is not motivated to perform the upgrades.

The Owner has a relative in long-term nursing care which is very expensive.  I have recommended selling the property to me would solve quite a few issues for them including: eliminating the cost and labor to upgrade the property, reduce the stress of selling the property, and turn outgoing payments of approximately $492/mo into income of approximately $575/mo.

I would like to structure the deal that is fair my friend while still meeting my goal of owning the property with cashflow. I have ran the buy and hold analysis with the following information.

Other properties are currently selling for $120K.  Fully upgrades units are listing for $135K .

I would like to offer 85K with 5%  ($5000) down with a 3.5% interest rate for 15 years. 

The following are my calculations from the Bigger Pockets Buy and Hold Calculator:

Monthly Income: $1,400.00 

Monthly Expenses: $1,204.93

Monthly Cash Flow: $195.07 

Pro Forma Cap Rate:  7.72% 

NOI $9,268.00

Total Cash Needed $26,750.00

Cash on Cash ROI 8.75%

Purchase Cap Rate 10.90% 

Purchase Price: $85,000.00

Purchase Closing Costs: $2,500.00 

Estimated Repair Costs: $20,000.00 

Total Cost of Project: $107,500.00 

After Repair Value $120,000.00 (conservative)

Down Payment: $4,250.00 

Loan Amount: $80,750.00 

Loan Points: $0.00 

Loan Fees: $0,00

Amortized Over: 15 years 

Loan Interest Rate: 3.500% 

Monthly P&I: $577.27

Do you think this is a good enough deal to purchase?

Do you think this is a fair deal for the Seller with Seller Financing?

Do you have any recommendations of formulating the deal?

I would greatly appreciate your insights and recommendations.