Potential 3 Property Off Market Deal

[Kellyn Cameron]

Hello Everyone!

I'm looking for advice/ideas on how to structure a potential deal. It is an off-market deal with another investor friend. I think it's the type of deal that could really help me scale my business but just not sure how to structure it. Also, I feel a little like the deal is basically a bet on lower interest rates in 3-5 years, which I'm not sure I like. All properties would be buy and hold. Any feedback good or bad is welcomed. 

Purchase Price: $555,000

Downpayment: $25,000

The seller has agreed to finance 10% (55k)

Estimated interest rate: 8.5%

Loan 1 (bank) - $475,000 (est. payment $4122)

Loan 2 (seller) - $55,000 (est. payment $329)

All expenses (Mortgages, Taxes, Utilities, Insurance, 15% of gross rents for repairs, vacancy, etc.) = $6600

Rental income = $6420 (room for growth here)

So my question is... is it worth basically breaking even and hoping the interest rates go back to normal levels? Pros would include getting to 3 properties for only 5% down. All units are basically turnkey outside of a few small cosmetic repairs I can handle myself. Deals are tight right now with the interest rate where it is and I think this could be a good opportunity to get in for low cost. Any thoughts are appreciated! Thanks everyone!

[Kellyn Cameron]

@Zane Cress

How important should price and downpayment be in a deal like this? I'll always remember the Pace Morbys line about letting the seller name the price but then the buy gets terms. My worry would be having enough equity in 2 years to be able to refinance.