Owner finance or Subject to?

[Abad Marroquin]

Hello community at Bigger Pokets. I am trying to buy 6 parcels five of them are adjacent to one another and one is about a mile apart. There are 15 mobile homes. It’s a mixture of single and double wides from around 1990.  One is lot only that is occupied renting $200/Mo., for a total of 16 lots and 15 mobile homes park owned. Owner pays water and landscaping. It is not submetered for water. I intend to bill water back to tenants later on to increase revenue for about $600/mo. Eventually, I should be able to make tenants mow their own section of the yard. That of course when their present lease expires. 

At this point, I made the seller two offers one lower bank financed and one higher owner financed. The agent responded back saying the owner liked my owner financing offer and was considering accepting, but he said he was going to ask the bank if they would allow him to do that because he still owes money to the bank. If that's the case, it sounds more like a Subject To situation here. We have been back and forth negotiating the terms and this is how it is at this point. $350k purchase price with 20% down at 5.75% APR with a 7 year balloon amortized over 20 years non recourse. At this point I am not sure how to proceed. The seller has asked me if I can match the APR of 6% which he is currently paying. I have agreed but I am confused since he still owes money to the bank.

At this point In the negotiations, I am buying it at around 17% cap rate and It can go higher when I bill the water back to tenants. There’s a lot of potential here when the property is paid off.  I can sell the mobile homes to the tenants owner financed and get back most of the investment and still get continue getting a good cash flow from the lot rent only.