Help me analyze this deal

[Daniel Pitner]

Hi Guys. 

I've been looking through deals to purchase a duplex and I came across one that struck my interest. Here are the details: 

1) listed for $239

2)Owner will carry 

3) Units rent for $850 and $775

4) priced in line with market value 

here are the financing terms: The owner has proposed 10% down, 7% interest, 30 year am, 3 year pre-payment penalty, non-assumable, if OMC buyer must pre-qualify with Traci Ranic, $450 fee through escrow, Setup and servicing fee to be paid by buyer.

What are your thoughts? I'm new at this. 

[Michael Ealy]

Originally posted by @Justin Kane:

doesn't sound like a good deal to me! is it in a flourishing established highly appreciating neighborhood?

lets run the numbers 

10% down + closing and fees = ~25k

owner carry note for 215k @ 7% 30yr am = ~1430 + tax~370+ins100+capEx100+Vacancy50+maint50=~2100/mnth expenses vs 1700 income so you will be negative approx 400$/mnth

I wouldnt buy this deal.. if you have 25k to invest I would invest it passively in a trusted syndication company that can return 10% preferred returns and 15-20% targets while you LEARN this business and grow your knowledge

hope this helps

Agree with Justin - this property won't cashflow so I wouldn't buy the deal either.

Offer $140K and see what the seller says. It won't hurt. If he counters at $170K, then close it for $160K.

One thing I'd like to add is: even if the property is a bad deal, don't just run away. Make an offer, even a low-ball one. I have acquired over 1,000 units and I am amazed that sellers sometimes come down significantly on their asking price. Had I just not make a low ball offer, I probably would have bought a lot less than 1,000 units.