Help with a deal Low-ball cash offer or low down FHA
Hi, I have a deal under contract. It is two units on almost three acres. The first unit is a 1-bedroom house (could be converted to 2 bd) and garage rented for $850. The second is a 3/2 mobile home, which rents for $750. Purchase Agreement is for $145k FHA loan w/ 3.5% down. We have done inspections and everything is clean with both properties minus about $2k in repairs. The property will have about an 11% cap rate and cash flow $520/mo.
We have run into a few problems with the 3/2 mobile home not getting a Certificate of Occupancy because permits were not pulled in '02 when a new mobile home replaced the old one. The city is willing to work with me and won't charge me anything for the permits, but I have to have the mobile inspected by them, which I am not worried about. Both units also need brand new septic systems, which the seller will replace.
My question is...should I wait the few months for the seller to take care of all of these issues and make sure that it is done right before I purchase, or should I offer him a low-ball cash offer to walk away and then get a HELOC on the property to purchase my next investment. If I pay cash I won't have access to the downpayment $$$ for the next property that I want to purchase, so I would NEED the HELOC. Our state offers great low financing options for the two septic systems so I wouldn't be worried about those.
Any thoughts and insights would be greatly appreciated. Thanks in advance for your consideration!
Avi