3 duplexes, seller financing, curious on terms

[Jacob George Lada]

Hello, I am currently interested in buying 3 duplexes. All are currently rented and bring in 4500 per month gross. Property taxes per seller are 8,000 per year. The owner wants to do seller financing with these terms Asking price: 600,000 but says he is not totally firm. Down payment: 150-175,000 Interest rate: 5-7% Payment: unsure yet but wants a balloon in 5-10 years. So I'm posting looking for advice as I am going to meet with him next week and discuss further in depth about buying the property. I have over 60,000 in savings so also interested in ways of obtaining money for the down payment. Thank you

[Jon Simpson]

You have a lot of questions that still need to be answered.

Are the month to month?

Do you plan to raise them to market rate right away?

I know I have a couple properties that are free and clear, tenants have been there a long time and I don't raise rents as much as I should.  I plan to transfer my properties to management company. It will make it more business like.

[Jacob George Lada]

@Jon Simpson I'll have to figure out the lease I didn't ask that today. But yes I do plan to raise the rent consistent with the market.

[Jacob George Lada]

@Jon Simpson @Craig Jeppesen I spoke with the owner today. He states only 1 tenant is on a lease until July 2019. The other 5 tenants have surpassed their 1 year lease. If the tenants chose to leave they must give a 30 day notice prior to leaving.

[Jon Simpson]

That's good. Then you will have added value, as soon as you rent them at market rate.

[Diana Muresan]

@Jacob George Lada I would do conventional financing for best terms. You can purchase your 1st MF as owner occupied with 3.5% or 5% down, pending on how is this property from where you live if you are W2 paid and keep the funds for the 2nd one as INV as you will need 25% down and go from there

[Jacob George Lada]

@Diana Muresan the seller did want to do owner financing. But I did research that route as well. All units would be rented upon purchase

[Diana Muresan]

@Jacob George Lada You can still do an owner occupied even if there are tenants, sellers agent just needs to provide a month to month lease since you need to show a units would be vacant within 60 days after closing. Not sure you can qualify as owner occupied based on your current home situation or what is the commute from work if you are W2

[Jacob George Lada]

@Diana Muresan I am a travel nurse. My home base is in Missouri but I'm currently staying in Michigan about 15 minutes from where this property is. I plan on living here in Michigan long term if i turn permanent staff at the hospital I'm currently traveling at. So say I done a conventional loan on all 3, paid 20% down, would I see the same interest rate across all 3 notes or various? Or how would I work the FHA when all units would be occupied

[Diana Muresan]

@Jacob George Lada only one can be OO (owner occupied) with 3.5% or 5% down pending on the program, the rest are investment, which is 25% down, you might be able just to get 2 buildings for now

[Jacob George Lada]

@Diana Muresan so are you saying I could do FHA, without living in the actual property?? All units would be occupied and the tenants plan on staying if I purchased.

[Diana Muresan]

@Jacob George Lada Please PM me

[Jacob George Lada]

@Diana Muresan I sent you a message

[Tracey Wittke]

Sorry to just get back to you! I did read through the entire thread. This would be my first apprehension... well first I guess would be having to inherit tenants (lol)! I have had no luck with that and swear I will never do it again. So my second worry...this will cost well over 100K of you cash flow just to purchase, probably more like 130K. We are in a very good market right now. To sell them individually if need be may not be as easy as you think. We have a ton of income based housing being built. I know the condo/apt building that was was finished not too long ago on Garfield and 8th are renting for about $1100/month. I feel like the property is overpriced, so equity to purchase another property may not be there for awhile. I'm not sure what your long term plan is, but for the BRRR method (thats what I do mainly) I don't like the the way the numbers look!