purchasing a 100% owner financed 12 unit. Trouble pulling trigger

[DJ Cummins]

Hello Everyone,

I have a contact that I made a couple of  years ago, and he has offered to sell me a 12 unit apartment building, with 100% owner financing.  No money down.  He has several hundred units and he is looking to start downsizing for retirement.  No money down seems like a tremendous opportunity.  Plus my figures estimate that I would be getting the property for 50-100k below market value.  We currently own a 4 plex, and 2 sfr's. so this would be a big step up for us.

My issue(s).  this is in a C to C- area.  Gross rent is $565 per unit, $6780 per month.  Taxes are very high, $13,000 per year(I believe it.  I have a 4 unit that is 4k in this town).  Flood insurance is required because this is near a levy on the Mississippi river.  Insurance is $12,500 per year currently. One unit currently needs about 10k of work to be rented out, it is mid renovation.  Property was built in 2003-ish.

Gross year rent = $6780

Taxes                   - $1083

Insurance           -  $1042

Wat/Sew/Trash  - $350

Est Mtg Pmt        - $2,100

cap ex/maint/vac- $1800

Cash Flow =        $405.00.

This is not a large amount of cash flow for a 12 unit building.  I feel like the risk factor is fairly high with this deal.  I love that we would be given instant equity with $0 down, but I just don't know if the risk is worth it.

Any Advice?

Thanks,
DJ