Help em form my offer- SFR with cell tower income...

[Joe Edwards-Hoff]

For those of who haven't read my other post, it is here-
http://www.biggerpockets.com/forums/12/topics/60255-how-does-it-work-when-the-seller-financines-a-portion-

To summarize what I talked about in that other post, my childhood nextdoor neighbor threw up a FSBO sign last weekend. He is fed up with a bunch of various life circumstances, and says that he just wants to leave. He runs a granite business out of a shop in his back yard. Business has been slow and he figures he'll try something else.

So, as far as I know here are the specs

Location- North Seattle, semi-desirable neighborhood.
Estimated Rent- $1300 per mo conservative.
*T-Mobile Income- $600
Amount owed on property- Approx. $25k
Taxable Value- $236k
Estimated Value (from comps) $174,392
Repairs Needed- Under $30k
Value minus repairs- 144392

*There is a t mobile tower located on the street. The tower control box is located in the owners shop, which he is paid $600 per month to house. He told me that whoever owns the house gets the money, and that in two more years it goes up to $750. (Edit- I do plan on doing a detailed investigation in the cell tower contract if I can get a contract signed.)

So, I have been looking at ways to set up this deal. I have never written a deal, not was I planning to start practicing until this summer, but this deal seems like it could work out for me. And being next door to my parents would have its advantages. My dad recently started restoring old cars, and if I didn't rent out the shop, he could use it. There are other perks as well.

As you can see from the repair estimates, the house needs some work. I really just threw 30k out there, but I used to do rental restorations with my dad, and other construction, and I highly doubt it'd be more than that. (Due diligence to come though.) The guy was a granite worker and so he installed marble and granite into most of the house. A few things were not done that tastefully either since he was just using scraps. Though I'd keep a few things like the kitchen counters and the heated slate tiles in the hallway to the bathroom. But he has some granite flooring that would get carpeted over.

Anyway, as for creating a deal, I just finished listening to the Weekend Millionaire program. One thing that I liked about that program, as opposed to others I have listened to, is that they emphasized the possibilities of setting up wholesale terms, vs just wholesale prices. And I think I want to attempt some of those tactics in this deal.

I think that my old neighbor would be willing to negotiate with me and I think that he'd be willing to carry a note in order to create some monthly income. I used excel to help me create some formulas pop out different offers.

Tell me what you think-

First I estimated what I could put toward a monthly payment, whether bank or owner financed-

1300 (rent)
-50% (expenses)
-$200 (desired cashflow)
+$600 (cell tower income)
===================
$1050

This process seemed simple, but I think it should work for my preliminary number crunching.

I then used $1050 to estimate what I could offer on the house. I have a potential line of credit where I could get 50k (maybe more) at 5.5% interest (maybe lower). So I made a table of offers. I established what I could offer for the house if I made a down payment of either 25k, 35k, or 50k (being paid off at 5.5%), had a term of 30, 20, or 15 years, and was paying him wither 0% or 2% interest. The numbers ranged from $315,240, down to $109,986. And regardless of what I paid, the terms changed, but my monthly payment would stay at 1050, when divided by paying him and paying back my loan for the down payment.

Out of all the deals, I think that the one that would be the best compromise would be the 20yr note, @0%. It'd be $210k for the house if he wanted $25k down, OR 193K for the house, if he wanted $35k down. The main point that I'd try to push is that if he was willing at financing me at 0%, it would allow me to be able to pay him more down, and more total, while still keeping it in the profitability range that I am shooting for. Obviously this could get shot down, but maybe it'd work.

I guess my main questions would be, does the above thinking look like it would be a good deal if it went through. I may be shooting high, but I just want to make sure I haven't overlooked too many things (since I am sure that I have overlooked at least a few). I am also hoping to have him cover some/all of the closing cost. It's all on the negotiating table, so we'll see.

Again, let me know what you think, and please be easy on me, I am a self proclaimed novice, which is why I am bringing this before you guys.

Also, let me know what you guys think about my math for estimating what I could pay per month. It seems very simple, but effective. I wasn't looking at cap rates or anything like that. I just looked at what my goal was for cashflow, what met net income would be, and found a number.... :D