Creative Down Payment for 6 unit....Good deal?

[Zack Clopper]

Hey everyone,

An agent approached me with an off market deal he had for a 6-unit in a C class neighborhood. This is the first time doing an analysis on a 4+ unit so wanted to run numbers by everyone. The owner is willing to do owner finance on the deal with the below terms.

Asking Price: $280,000

Down payment: $42,000 (15%)

I/Y: 4.25%

Amortized: 360 months

With the current numbers on the property this is how it would cash flow however market rents are around $650-675 on average so the rent could go up slightly but rather account for current rents. Also I would consider looking into billing the tenant back for water or trying to sub-meter down the road to increase cash flow.

Current Rent: $3,725

Mortgage: $1,170.82

Taxes: $308.33 (3,700/year)

Insurance: $133.33 (1,600/year)

Vacancy: $372.50 (10%)

Repairs: $186.25 (5%)

Capex: $279.38 (7.5%)

Water Bill: $266.67 (3,200/year currently paying)

Property Management: $372.50 (10%)

Cash Flow: $635.22

However I am thinking about taking a loan out for the down payment from a friend/investor who is looking to park his money for a few years at 8% interest. The terms of that loan would be the following:

Down payment/Closing costs: $49,000

Interest Rate: 8%

Amortized: 120 months

Monthly Payment: $590.79

Cash flow with assisted down payment: $44.43

I would like to go this route and just save the $44.43 towards any future repairs in those 5 years. Even though its amortized for 120 I would pay off when I refinance the building whether that be from equity or cash I have saved up.

The building does have a new roof and windows installed last year also. I am going to be looking at it this weekend. Just wanted to keep my capital for when I find a deal and need to go the traditional route. I know the cash flow is not the greatest but since its owner finance I figured I would put some thought into it.

How does everyone feel on my numbers did I account for enough or too little?

Thanks in advance

Zack