Owner Financing in San Francisco

[Eric Skyta]

Hello all I have a unique situation that I am hoping some people would be able to weigh in on. 

I am moving into a studio apartment in San Francisco. The neighborhood is Nob Hill which is one of the most expensive and desired neighborhoods in the city/country. The landlord is an older gentlemen that I know wants to sell. I currently am doing repairs around the building for money off rent and can see the potential to raise rents everywhere. Here are some of the numbers that I have gathered so far. I want to approach him with 2-3 different offers so he sees I am trying to work with him. 

7 Unit Building 

2 Bed Room (owners unit) worth $4,000.00 a month

2 Bed Room ($3,950.00 current rent) worth $4,200.00 a month

Studio ($1,850.00 current rent) worth $2,400 a month

Studio ($2,000.00 current rent) worth $2,300 a month

Studio($1,600.00 current rent) worth $1,800 a month 

1 Bed Room ($3,000 current rent) worth $3,300 a month

1 Bed Penthouse ($4,300 current rent) worth $4,700 a month

Potential for garage rental, Storage, and Laundry as well

Current Income $16,700    Potential Income $22,700  

I know that the gentlemen likes to spend the weekends in his apartment and I want to give him an option for him to stay for a few years to make the deal interesting. 

I want to put minimal money down if any because I know he hates taxes (old school guy) so any capital gains would make him mad. 

Thinking that I could give him a 4 year period to stay in the apartment and have a balloon payment after 5 years and refi after he moves out. 

There is about $100,000.00 in mandatory earthquake retro fitting that needs to happen so maybe make this a credit? 

I also plan on staying in a studio or 1 bedroom. Cash flow will be minimal if any but it is a version of a house hack and this area is only going to appreciate. 

Any insight would help thank you so much!