Creative Financing - Offer

[Michael Barido]

I found an 8-unit MF for sale for $525k. I'd like to offer no more than $475k (based on difficulty the seller has had in selling (> 6 months) and communication with them they indicated that it was a fair distance for them to maintain and that's why they want to sell) and utilize owner financing. Currently owner is using a REA but it's been listed for 6 months (come Feb. 28) and I'm hoping it was a 6 month contract. I'd put down $50k and pay them $1240/month (interest only $425k @ 3.5%) and then refinance prior to or at 5 years. At 50% expenses, $1240 payment, and 7% vacancy the property cash flows at $1640/month. I'd like to offer this lower since the owner says it's difficult to maintain - I read that in a couple different ways but the point is that there is difficulty there and I don't want to pay full price ($525k / 1.06 = $495k => so ask $20k less). Obviously I would have to look at rent rolls to see if they have issues with vacancies. I'd also look at maintenance receipts and have it inspected. This is in my home town but I'm not opposed to walking away if they were to ask for the world.

Is this a good deal for the owner and/or myself? If not, what could be done to sweeten the deal for either party where we both are happy? Not the great economy in WV but most are hard working. The property probably won't appreciate very much at all.