Taking over Bond Financing on a 120 Unit Deal

[Samson Kay]

My broker approached me with the following deal.

120 Unit complex comprising 3 br and 2 br for an asking price of approximately 3 Million. Normally, I wouldn't even bother looking at this deal, because its out of my price range. But the offer is as follows, I can assume the existing "Bond Financing" which will be paid in full within 10-11 years for as little as 10 to 14% down depending on what I negotiate.

10% I might be able to swing, But there are other aspects of the deal that I would like some help with.

I'm told I would need to get a letter of credit to insure against the BOND coming due so that payments will continue to be made. Also the Bond increases each year until it is paid in full. But otherwise for the first few years, the building would give a cash on cash return almost 50%. 

I figure if we could acquire the property using this strategy we can hold it for 1 or 2 years, and refinance out of the Bond and get a return of 20% cash on cash.

Does anyone out there in BP have experience with this type of bond financing that can shed some light on some possible pit falls?