Commercial loan + Seller Carry Back Option

[Ryan Neiswender]

I have an opportunity to by a 6-unit property for $300K with a $240k Commercial loan and a Seller carry back of $60K at a 6% interest rate with a 5-year balloon. 

Carry back would be interest only payments for the 5 years. 

The property would cash flow ~$100 a month after all expenses. 

In this market, yearly rent increase of $50 x 6 units is expected. The goal would be to refinance after 5 years, use appreciation to pay off 60k, and cash flow would continue to increase over time. 

This would be my first time looking to do a $0 down investment property and I am looking to seek advice from those who have experience with similar financing. 

Thanks, 

Ryan Neiswender 

[Don Konipol]

Good chance a major problem - tenant non payment or damage, needed major repair, etc. puts you cash flow negative for that year.  Still, even breakeven with nothing down is quite an achievement IF you’re NOT paying an over market price in exchange for the owner financing of what would normally be your down payment.  If you have liquid reserves - say $10k +, and IF the property is in good, not average, not fair, but GOOD condition, and the property is not in a “war zone” and not in a declining area, and the property is not in a city where it is or can be subject to rent control, then you might have negotiated the deal most investors strive for but seldom achieve.