Lease option on a six unit property.

[Diego Basquez]

Hello everybody. Like I've posted before I am barely starting and looking for my first deal and I want to use creative investing. There is a property I was looking at and thought that I might be able to do a lease option, but I would like other people's opinions, suggestions and advice on this. An overview of the property is the following: The property consists of six 2 bed 1 bath units that bring in an approximate of 3600 per month for a total of approx. 43000/year. I calculated the expenses with repairs, utilities, cap ex, property management, taxes and insurance to be around $24500 for the year. If we subtract that from the income we are left with an NOI of roughly $18500 . With a Cap rate of about 6.5% for the market I arrive at a purchase price of no more than 285000. I calculated my mortgage payments for 285K and they are 1530 with a 5% interest rate for 30 years assuming I dont give a downpayment. 1530 multiplied by 12 gives me a total of 18360 for my years mortgage. Given that my NOI would be 18500 that leaves me with a cash flow of $140 per year (almost nothing, but considering that the rents are below market I am confident that with good managing I can raise those rents at least 50 per unit per month. The thing is that the seller is asking for 412000 which I believe the property is not worth with the income it produces. My question is, if I can convince the owner that the property is not worth what he is asking and I can close on a 280000 purchase price, would it be a good idea to pursue a lease option to save the money to give a downpayment for a conventional loan maybe 3 years later and purchase the property? I appreciate any comments, advice and constructive criticism.