Should I take it....

[Jason Cobb]

Please give me your thoughts....I had an opportunity given to me from a fellow landlord. He owns the apartment buildings across the alley from my two apartment buildings. We are three blocks from a University Campus. Half jokingly a few days ago I mentioned if he ever wanted to sell for him to let me know. He smiled big and said, "Well, funny you asked. I am getting tired of the snow and cold and Florida is calling to me for retirement."

Two days later he invited me over to the property and showed me what he had to offer. Turns out he and his wife have been planning on downsizing their 34 units in three towns, and want to move to Florida by mid-summer. He offered me his 14 unit apartment apartment mini-complex at $485,000. I have watched in the last year all the updates to the buildings, however, he spelled them out on paper. Over $150,000 in updates; windows, doors, appliances, siding, insulation HVAC, the list goes on. It comes to $34,642 per unit. 12 units are two bedroom/one bath, two units are three bedroom/one bath.

It can gross $9,075 per month. Current is $8,075.

Perks: location local to my own, has office and brand new coin laundry, still close to university, the construction updates were done right.

Our financing would require private money for the 25% down, or more.

My wife and I are torn, but this is a well maintained and updated property, the proximity to our own apartments is great. Please give me your thoughts!

[Joel Owens]

Very hard convincing a seller you want zero down. What if the property performs worse than when he owned it?? You start having trouble and then hand it back to him. He now spends from a distance a ton of time getting it to where it was and has to sell again. I have seen some sellers in this case taking a year or longer to get it going well again.

Not saying you will do this but this is worse case scenario that sellers think of when getting asked to do these kinds of things.

It would help if you have equity built up into other properties the seller could attach as security ( cross collateralization) in case something goes wrong.

I wouldn't get too deep with this until you know the seller wants to even entertain such a thing. A question to ask is if they need cash today or are just wanting to not own and manage anymore with an income stream coming in?? How they answer will be very telling of their intentions and desires with selling the property.