Advice on a Sticking Point On A Deal

[Bruce Harding]

Looking at a mutlifamily with over 20 units.   Last roofed and sided in 1996.

Owner asking for a certain price but I found out the roof will probably last another 5 years at best.

Class C property would generate $50K year NO.

Would be taking a non recourse 5 or 6 year interest only mortgage loan on property.

If owner does not provide concession looks to me like I would have to walk on the deal ?

[Joe G.]

@Bruce Harding

It is all about the math Bruce. Run the numbers and make sure it will meet your goals with the roof replacement costs. Remember you can likely finance the roof purchase if needed at a low rate at a local vendor. Also, remember that the replacement roof has some tax advantages to the owners as well.

With that said, get estimates and professional proof (from a contractor) that the roof will need the repairs and present them to the seller with the fact that you want to move forward, but you need a discount for the roof. Anything over the cost of the capital to pay for the new roof is likely to work if the deal works now due to the tax advantages. 

Good Luck!