Potentially taking losses while student house is vacant

[Aidan Birmingham]

I am negotiating a seller financing deal for a student house at $380000. The problem is that the house is vacant for the first time is years because it wasn’t listed properly by the owner that inherited it. Since the leasing season for students passed there is a good chance it will be vacant until next June. Once it is rented the property will cash flow about $1600 a month which would be about 30% cash on cash return. While it is vacant I will be losing about $2800 a month. I attempted to ask to defer payments until it is rented but the seller will only offer interest only payment at 7%. Do you think I should move forward given the returns once it is rented or is the short term loses too much? 

[Theresa Harris]

Quote from @Aidan Birmingham:

Quote from @Theresa Harris:

That is a big loss.  Can you do anything with it for the next year (ie short term rental)?  If it is vacant for a year, you will take another 2 years after that to make up those losses.  Are you willing to forego cash flow for 3 years?

No the house is only really suited to be rented for students. My other rental cash flow can cover the loses but I am not completely comfortable buying a property that will lose that much obviously. But I am torn because the long term return is great. 

 There may be some people who are late and you might be able to rent some of the rooms.  If it is a larger university, they may also have visiting students or faculty who need shorter term rentals (ie a month or two).