2% rule on a 2.5mm portfolio

[Jon Rood]

I am looking at a portfolio that is mixed with commercial and residential. It has single family, commercial, storage complex, and even a car wash. I have reviewed the leases, deposit slips/bank accounts. Gross reciepts of 45000-50000 month. I also have known the guy for 15 years, he is an honest man with a great reputation in the community. I want to pay all cash, He is proposing $1mm down and owner finance $1.5mm @ 7% for 10 years. I am wondering what you guys think at first glance.
Come on Jon and Bryan, tear it apart. lol

jon

[Bryan Hancock]

I'm not sure that businesses like the car wash are going to operate the same as a CRE deal will. You should really try to determine net OPERATING income for the underlying businesses. Then the rest of the analysis should be fairly similar to what you would do for a real estate deal.