Offer accepted on apartment buildings...now many questions

[Brenton Tigner Jr]

Greetings all, I just got accepted on a 16 unit apartment building and about to finalize the LOI with basic terms. The numbers work out to a 10 cap. In regard to Cash on Cash return, the seller is will to carry financing on a portion equal to the down payment a finance company would require. My question, can the amount the seller is willing to finance be considered the down payment in which case there is no out of pocket? Or do I have this concept misconstrued?

Additionally, 2 of the units were damaged by fire and have since been gutted and rebuilt and inspected by a civil engineer per the seller. There is more detail, anyhow I made the sell price contingent on the 2 units be brought to rent ready status..Is this the best move or should I buy as is and ask a reduction in price...having the units finished up myself as a value ad?

Thanks,

nervous guy

[Hadar Orkibi]

@Brenton Tigner Jr In regard to the financing, its really depend on your lender.

if the lender agree that the seller will finance the down payment so you will be in the deal with no money down. did you talk to your main lender? 

Most lender do want you to have some skin in the game, typically 10% minimum. 

If the units need work then you are likely to need cash to pay for the rehab.

Re the damaged units: you will need to fine out what it needs to get it back to code and rent ready. if you know that part then in my opinion i rather have the price reduction and do the work myself. this way you can control the process and time frames.