Multi-family deal questions

[Josh Quant]

Hello BP,

I have a few questions about a couple properties I am looking to purchase and any help would be appreciated, as this is my first "commercial" multi-family I am looking to invest in.

Here is the situation:  I have one owner looking to sell 2 buildings a 5 unit and a 6 unit.  The apartments are in rough shape, but all but 1 apartment is rented.  The two buildings gross about 5k and I believe with rehab I can get rent up to about 6k per month.  cash flow with 25% down and 20 amort with 10 year balloon on both properties is a conservative $2,250/month.  My real issue comes to the cash I would need to put down.

The properties are listed at 250k for both and I can get them for 200k, but when you add in closing costs say 10k and min 50k down I am a little skidish because I don't want to drill my cash reserves.  My other issue is that these leases are month to month and I think when the underwriters get ahold of them they might require more down.  I have the cash to cover that and initial repairs (approx. 15k to start and then I would cash flows to improve properties for first year or so), but the well would be pretty dry after that and I have other projects I would like to do so I don't want to use my cash.

I would love to hear opinions - or what others have done.  Lastly, I want to hold these long term...

Thanks in advance

Josh