Help Me Analyze This Owner Finance Deal Please
Hey Y'all,
Have this bond for deed (same as land contract in other states) deal on the table that I'm analyzing. I like the terms and this is my first owner financed deal as well as my first potential rental property so I don't want those factors to cloud my judgement. Would appreciate any thoughts or input. Thanks!
Property(s): Two separate 1 bed, 1 bath cottage style houses on four shared lots in a desirable neighborhood for rentals. One is slightly larger in size than the other with an added office room. Non-flood zone. Central to town. Has two long term tenants in there for the last 12, 14 years. Decent condition.
Owner Financing Terms:
$120K Purchase Price
$3K Down
$117K Balance - Paid Over 25 Years
$400/month note
0% Interest
No Pre-Payment Penalty - Actually 10% Deduction of Balance to Pay Off at 15years
Unit A:
Current Rent - $650
Monthly Expenses:
Note: 200
Taxes: 28.71
Escrow Services: 35
Insurance: 100
Property Management- 10%: 65
Maintenance - 12%: 78
Vacancy - 8%: 52
Garbage: 13
Total monthly expenses day 1: 571.71
-65 while self-managed = 506.71
Unit A Current Cashflow: 143.29
Notes:
Market Rents - Around 700-750
Considering making tenants pay for garbage
Insurance may go up as I have yet to review the policy
Escrow services may be $35 for each property or $35 for both
Unit B:
Current Rent - $475
Monthly Expenses:
Note: 200
Taxes: 28.71
Escrow Services: 35
Insurance: 100
Property Management- 10%: 47.50
Maintenance - 12%: 57
Vacancy - 8%: 38
Garbage: 13
Total monthly expenses day 1: 519.21
-47.50 while self-managed = 471.71
Unit B Current Cashflow: 3.29
Notes:
Market Rents - Around 650-675
Considering making tenants pay for garbage
Insurance may go up as I have yet to review the policy
Escrow services may be $35 for each property or $35 for both
Thoughts? Would you do this deal?