Leery, but should I be? First time multifamily opportunity.

[Dave Kansagor]

I am looking at a potential investment property which would be #2 for me, but my first multifamily. It has a good cap rate. The property needs some work and certainly isn't up to my standard of living, however there have been VA tenants living in the property for years who seem to be ok with it as-is, or so I'm told. What questions should I be asking? Seller is offering financing but at 13%. How would you finance? Owner bought it earlier this year for almost 60% less than what it's listed for. Since VA tenants rents are subsidized by the VA, are there property standards it would need to meet like when a VA borrower buys? Does anyone have any experience with VA tenants; good/bad or indifferent? Any constructive comments/advice is welcome. TIA.

[Aaron K.]

I would never assume that you would leave a property that needs work as is even if the tenant is okay with it.  I would not take that owner financing if possible, I don't know about your market but that interest rate is double a good cap rate in CA and more than most hard money lenders would charge.  I would also be very suspicious of someone selling a property that they bought less than 6 months ago.