Assistance with evaluating options for $$ on a multi-family deal

[Stacey Carroll]

We've found a great off-market, small multi-family investment opportunity in our desired area (north whatcom county, WA). It's perfect for us because it's close to our other rental (and our home) so we can self-manage.  It's in an area that is growing A LOT.  It's a 4-plex, side-by-side with garages and full size washer and dryers in unit.  Each unit is 2/2.  Cap rate is just under 5% (which we find more than adequate in our market).  Cash flow will be decent - but not great, but we are willing to take the risk for this property because there is good potential.  The owner has taken incredible care of this place - with a new roof, brand new furnaces and appliances less than 3 years ago (converted to natural gas).  One unit has recently turned over and rent went up $450 per month and rented in days.  2 others could go this high and one would go up $250.  Here's the challenge:  The owner (nearing his 80's) doesn't want all the cash now (I know - THIS isn't the problem).  He wants to carry the paper on $400k.  Purchase price is $800k.  We have $150k cash - but not what we need and I'm not sure I want to spend all our cash.

So, trying to evaluate all our options, here is what I think our options are:

1)  Look into a hard money lender that would be willing to have a lien on the property for the owner's contract.  Is this a thing?  If so, I'm worried about if I could find a hard money lender that would be interested in such a small investment and how it would affect cash flow because some I've talked to charge 9% interest.  Also, do any commercial banks allow loans with partial owners contracts/liens? 

2) I am currently self-employed and I could move retirement funds to a self-directed IRA, but not sure this is possible unless the seller is willing to write a non-recourse loan doc with us. Is this a thing - seller non-recourse loan?

3)  Find a partner to do the deal with.  Selfishly, I don't like this idea because finding and getting this deal was a lot of work and it feels like giving too much away to bring a partner in now.  Although some of you may be thinking blah, blah - if you had your own capital, this wouldn't be an issue!

4)  My favorite idea (but my husband would probably divorce me):  Borrow from our primary residence (which we currently don't have a mortgage on and is valued around $450k.  Again, this is the obvious choice to me - but marriage and compromise and all that good stuff!

5)  Other options - what am I missing?

Thanks in advance for any and all feedback!

Stacey

[Stacey Carroll]

@Bjorn Ahlblad and @Kim Meredith Hampton - thanks to you both - I'm practicing all my negotiation skills on my husband!  @E. C. "Stony" Stonebraker - thanks for this!  I will definitely check it out - always interested in learning new ways.  I do have a really good firm that I work with!  

I really appreciate everyone's input!