How to Structure a Commercial Deal

[Paul Stout]

Ok here is the latest deal that I have come across.  I know that I do not have a lot of information here to make the most educated analysis but I am looking for ideas on how to structure the offer.  I will eventually get all of the financial information to plug in the numbers of the offer but how would you structure this deal?  The owner is putting a pro forma together for me now.

The owner has a 24 unit apartment building that was built in 1979.  There are 18 1/1 units and 6 2/1 units.  This is in a nice neighborhood.  The gross income is approximately $17,000 with 80% occupancy.  The common areas have electricity for lighting and hot water heat and there are two coin laundries so the owner utilities consist of common area electric for lighting, gas and water for the common area heat and hot and cold water for the coin laundry. 

The owner owns two such buildings and does not owe that much according to him.  I have no idea yet what he does owe.  He is asking $1.6M.  The taxes are $24,000/year.  he wants to sell one now and one in three to five years when he retires.

He said he is open to owner financing but he doesn't want to carry a note into retirement.

What are some ways I can structure a deal to make this work.  I currently have $75,000 cash and a private loan commitment of $70,000.  What would you do?  What offer would you make?  I know many of you are going to start out by saying that it depends on the numbers but lets say for the sake of conversation that the numbers look great and the asking price is fair.