Opportunity to buy 5 single family home rentals....Good deal?

[Jason Flint]

I just recently joined BP and the information/advice I have seen so far is always very solid, so I thought I would ask your opinions on a opportunity my wife and I have.  We currently own 5 single family rentals in the Greenwood/Whiteland/South Indianapolis area and have an average of 35% equity in each.  I met an investor/landlord about a year ago who owns 60 or so single family rentals in the same area.  We have been talking with him pretty much the whole year about him wanting to liquidate some of his properties.  He has agreed to sell us 5 of his that are tenant occupied for 20 to 25% below market value.  We would obtain a commercial loan to buy the 5 from him.  We would not have to put any money down due to the discounted selling prices.  They are all in A and B neighborhoods which is what we are used to with our current 5.  I know the deal sounds great so far, but here are my concerns:

*Even though we would buy them below market value, due to the appreciation this area has gone through in last few years, and the fact his current tenants all pay below market rent, the cashflow, atleast in the beginning, would not be good. ( I do realize I can raise the rents at the end of leases, but if we end up getting new tenants due to the raised rents, I am certain we would have to put some $ into the houses to get them rent-ready again).

*While none of the properties are "crap" properties and are in good neighborhoods, I am not sure how well they have been maintained the last 5 to 7 years as the main reason he is selling is because he spends most of his time on his Flipping projects and has certainly neglected his rental inventory a bit in recent years. 

*The lack of good cashflow along with the unknown of the maintenance makes my wife nervous on this deal.

Any thoughts/advice would be greatly appreciated.  

Thanks!  Jason