Deal or NO DEAL (Owner Financing) Numbers Don't Make Sense

[Dustin D.]

Hello,

Any Help would be greatly appreciate. (Ohh couldn't find the exact forum to post so if I didn't select the right one please tell me so I can post it in another forum). Anyway here it goes.

Not sure if we are going about this correctly and would like some help. We have found an investor that is Owner financing one of his rental properties and we wanted to step in and take it off his hands. However after running the #’s (Which I’m not sure we are doing correctly) I would like some help and see if this may or may not be a good deal.(I’m guessing no Deal however new and learning).

The owner is selling the house for 405,000 in a nice neighborhood located just a few miles for a high school and major access roads to and from the city. The property is well kept, built in 2003 and in walking distance of a nice family park, shopping center, entertainment and a movie theater. The property is a townhouse with a garage and 2 upper floors with 3 bed and 4 baths with a back yard and 1,470.

The owner will finance 100% require a 5% down payment with a fixed rate of 5.5% over 30years and a balloon payment after 5 which can be extended he is looking to have this set up for his retirement. The rent is $2,100 a month and he is telling me he is cash positive right now and has been for quite some time. He bought the house in 2003 for $240,000 as an investments property and has been renting it out ever since and the current tenants just signed a brand new 1yr lease and said that they don’t plan on leaving for another 3 years (Which I know is questionable).

Running the #'s and again not sure if I'm doing this correctly, but with and owner financed loan of $384,750 and a 5.5% fixed rate over 30years the ARV of $445,000 and rent coming in at $2,100 I'd be cash flow negative -$945.00. Is that correct?

I’m guessing that is correct as even though he is cash flow positive that’s off his loan of $240,000 in 2003? And further for this property to even cash flow if I’m doing the #’s right the owner would have to owner finance the house at $215,000 which is $25,000 less than what he bought it for 13years ago.

Any help would be greatly appericate especially with the numbers and making logical sense of this. The real questions is DEAL or NO DEAL. Thanks for everyone’s time.