Analyzing and financing first deal

[Ryan Proffit]

Hello guys, I am working on making my first deal. I am working with a partner who has about 10 years of experience. We are looking at two 4-plexes on same lot. The lot is also big enough to build another 4-plex as well. The seller is asking $390,000. The current rents are $3995 when fully rented which are extremely low. There is currently one vacant unit. This is a very nice property in a very sought after area. It is currently off market and unadvertised.  I also personally know the owner and my dad lives in one of the units and is friends with the owner.  After we buy it, we plan to paint and carpet the vacant unit, and raise rent on all other units to market value as soon as we can. That would bring rents to around $5250-6000 depending on how much updating we get done.. We are also hoping to get the owner to finance it. I am currently checking on taxes, other than that am I missing anything? Feel free to correct me on any of this. I also plan to try and get a price reduction if we have to source financing through a bank.

My thoughts are trying to get it owner financed for 10% down on a 25 year amortization on a 5-10 year balloon.  The banker suggested us putting 10% down, and getting the owner to finance 20% on a five year note, and the bank covering the rest on a 15 year.  We are able to put as much as $70,000 down.  Let me know what thoughts you have on all of this.  I made a similar post in the analyzing forum and didn't gain much traction.  I look forward to hearing from you.  Thanks .

Ryan

[Oleg Shalumov]

@Ryan Proffit  look like you found a good deal and if you sure you can increase those rents (hopefully on all units except your dad’s :-) - you should be in a good shape. 

For the offer I would suggest ask seller to make a choice. I like to make 3 offers (You can adjust the numbers):

1. Full price with full seller finanace. 

2. $370-$380 if seller can finanace 20% of the deal

3. $350 otherwise.