Seller financing on a 70 unit apartment building, pros and cons ?

[Frano Buhovac]

Hi everyone,

I have an off-market 70 unit building deal with an amazing location, its a mom and pops type of deal where they want to get rid of the property since they are already in their 70s and I'm looking into buying it, the property is fully paid off by the owner, the owner still does the management of the property and it is not in the best shape, but the location is great Its literally 20 yards away from Loyola Chicago university. I believe that I can double the worth of the property just by managing the property professionally. 

My question is since I currently don't have the required down payment would seller financing be the best option?  

[Greg Scott]

Seller financing can be a great way to go.  

But, don't forget you will still need cash. You need working capital to pay the bills and you will want to address any deferred maintenance up-front.  Trying to fund repairs of out cash flow can be a risky strategy.  (Example:  Furnace goes out and you don't have the money to fix it so tenants move out so you NEVER have the money to fix it.)  

Partnering with someone with both experience and cash can be a good way to go.  Aside from the operating cash you will need, it may open up options for financing.  They may have the 25% down payment you are looking for.  Keep in mind that if you want an agency loan, you usually need to have a partner that has already had an agency loan in the past.