Acq strategy for 22 unit with fire damage

[Jose Guevarra]

Hi,

I'm trying to come up with an acquisition strategy for a 22 unit that went through some fire damage almost 4 months ago. I'm in touch with the broker who has given me these details.  The current owner spends most of his time out of state.

The unit has only 3 units that are collecting rent and the others are vacant or condemned.  The insurance company is paying for the renovation which is being handled by a contractor to repair structure and electrical in the fire damaged units.  I'm not sure if I purchased it immediately that I could even take over the repairs.

The complex was purchased about a year ago with seller finance for $900K with $100K down and is interest only payments on $800K.  The owner is asking for $950K!?!?!

There several scenarios that I can think of:

1.  I try to assume the loan, seller loses $100K and takes that as a loss on his taxes.  I might be able to negotiate the terms on the loan or even defer payments for 3-4 months while I rehab and occupy the units.

2. I assume the loan, try to negotiate some terms, offer the seller $25K payable in 9 months to walk away from the property.

Question:

What condition will the property be in after the contractor is done? Will the units be rentable?  

Can anyone offer any negotiating tips to get the original owner to reduce the note amount to say $700K?

I would appreciate hearing anyone's experience on how they dealt with a similar situation.