Need advice structuring a deal by FSBO with owner financing

[Michael Lowry]

I am reaching out to the BiggerPockets community for a little advice. I am working on a deal and need some help structuring a FSBO with owner financing...if it's even a good deal!

3/2 SF, 1971sqft, built in 1998, asking price $180K. Comps are $130k-$160k

Current Mortgage amount $100K. No leans or back taxes owed.

Currently rented $1600/mo (area rents $1400-$1600)

Owner needs to sell to use money for retirement

Attached images are calculations as if I purchased for $100k and financed $60k. You will see the numbers do not work. If you could help me help this person enter retirement with security I would really appreciate it!!

[Christopher Brainard]

@Michael Lowry

I'm not familiar with your area, so take my advice with a grain of salt, but you seem to be offering the owner top dollar on a property that is already getting top rent dollar and you're putting 100k down and paying 7% on the balance.

The owner isn't doing you any favors here at all and I don't see the benefit/upside in the deal for you. You're going in with no discount on the property, so if you need to sell the property within the foreseeable future, you'll probably lose money, and since the rent is already at the top of the market, if you lose this tenant, you may not even be able to fill at the same rate.

With the amount of working capital you have, you would be better off looking for a deal that has a better return on investment. The only time deals like this are good (paying top of the market with owner financing) is if you can get in with little or no cash, get reasonable terms from the owner, and the property has sufficient cash flow to break even (including reserves for repairs, capex, and property management).

-Christopher