would you do this owner finance deal?

7 Replies

I was wondering if I could get some advice on this. I sold my business and have a little money to move into full time real estate but cant show good enough tax returns right now being I was self employed and beat it down real far. Were also moving North west from Florida and need some security for my family.

Theres a owner finance deal: 235k for 6 units,  that are all leased bringing in 3650 mo They want 40k down @7% interest for 7 years. Said there is about 200 cash flow per month but I would own it out right in 7 years.

Does this sound good to anyone? 

thanks for your help, pretty new to this. I really only have about 40k to invest and would be sitting good in 7 years. We were going to try to flip but its been real hard finding the right deal and we must move because our daughter is going to school out there.

Personally, I wouldn't do it, because the interest rate is way too high IMO. If you're putting 20% down you should be able to do better than 7% over 7 years. You're going half of a 15 year note and paying double the interest. If one unit goes vacant you are negative. Where do repairs factor into the equation? Property taxes?

On the surface I don't see these numbers adding up. 

I'll let others reply to whether or not this is a good deal from a financial return position.  I'll just throw out a little food for thought on considering what to buy for your first property.  

I know several people will disagree with me on Bigger Pockets, but I'm not a big fan of buying a 6-plex for your first purchase.   

1. You are about to get 6 tenants to deal with.  If you don't like being a landlord or aren't good at land-lording, you now have 6 units, 6 tenants to deal with as opposed to one tenant in a house or 2 tenants in a duplex.

2. When you exit out of this property your scope of buyers narrows down dramatically as you get more units in a property.  There are significantly more people interested in buying a single family home than are interested in buying a duplex.  There are more people interested in buying a duplex, than a 6-plex.  Also, when you sell this property the smaller pool of buyers will almost all be investors.  Investors buy only on cash flow multiples and need to buy properties at below fair market value to make properties work.  A potential single family home buyer will be more likely to buy on emotion and purchase a house at fair market value.

Just a couple thoughts to consider when buying your first property.  Good luck!

I would ask the seller to extend the length of the contract to lower your monthly payment.  If you were to use the 50% rule, you will have around $1800 in expenses every month before your mortgage payment.  With your current plan you have a payment of over 2900 + 1800, in other expenses which puts you at a loss of $1000 per month.  If you can extend the terms to 15 years you are closer to a break even, and over time it should be a great property, assuming you can add some value, reduce the expenses and the market appreciates.

If the seller will not extend the time frame, I would move on.  Keep looking for deals, keep working, and you will make it work.


I appreciate you asking this question. You rock with your willingness to put yourself out there (both with action and questions)! I'm newbie enough I don't know the answer as to the specifics ROI & cash flowing.

I love the replies you have received so far. I'm learning right along with you.

Another option would be to scale back to a duplex, live in one unit, you might qualify for the FHA203K which provides rehab dollars in addition to the purchase. Listen to the recent BP pod cast with Anna (?) she has followed this model successfully.

I hope you'll follow up with the outcome and your thoughts.

Take Care,


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Thank you all for your input and advice. I forgot to mention that 2 of the six are commercial store fronts and 1 is a mobile home, 3 are homes.

Taxes is a good question. Their lower end homes that have bee remodeled so I think repairs costs wouldnt be as high as you would think but better to be safe. 

I will keep looking, you guys are awome for responding. Any other ideas, I'm open.

I need a generated income asap with 40k. I like the idea of living in a multifamily property and renting the others out.

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