Owner Financed Apartment Quesions (88 units)

[Ryan Hall]

48 Units

44 - 2/1

4 - 1/1

ASKING: $2.7M

Gross: $365,000

Net (depreciation added back) $234,000

New shingles, new rain gutters, great location next to park, not far from down town, preferable area of town. No current vacancy. Was managed by company, now owner managed until sale(company was increasing rates for the year). Owner is liquidating several buildings in the state and cashing out in retirement. Has owned units for approximately 20 years.

40 Units

38 - 1/1 - $490/mo (utilities included)

1 - 2/1 $650/mo (utilities included)

1 Studio

ASKING: $1.3M

Gross: (need to get gross numbers)

Net(depreciation added back in): $130,000

No current vacancy. Includes shop and storage sheds. Good side of town. Is not apartment building, but 10 4 plexes. Was managed by company, now owner managed until sale(company was increasing rates for the year). Owner is liquidating several buildings in the state and cashing out in retirement. Has owned units for approximately 20 years.

Owner will finance one or both.

Financing terms:

20% down

5% interest for first 2 years.

increase rate .5% each year after until 10 year balloon.

I’m interested in getting into this light and attempting to negotiate a way into a no down or extremely low down deal. I can come up with some cash, (20-30k) but would rather not.

Basically, my questions:

What might I be missing?It seems to me that the financing terms are less than favorable unless he is willing to take less down or negotiate somehow.

I am looking for a way to structure a deal that is no or low down, how might you do that?

My thoughts:

1. Seek bank financing with owner carrying 20-30% down payment with prefviously mentioned terms.
2. Seek cash investor to cover 20% down payment (numbers don’t seem to be attractive enough for a cash investor to bring in that kind of cash, but I may be wrong)
3. Flat out tell the seller I’m looking to get in lighter than 20% and see how much he would.
4. If i’m off my rocker, I would love to hear that too. Just trying to make the deal work with little to no down.
   1. based on a quick look at cashflow v. debt service, it looks like (based on the numbers given) this could be a tight deal at 100%. I’m aware of that. What I’m wondering is, how can I make this deal look good and structure it so I am out of pocket up front at a low cost?
5.        It looks like I might need to get more info to really get a good analysis, but this is my first time looking into an apartment unit. 

Thanks in advance for anybody with knowledge and a voice taking a few minutes to give some advice on this deal and what you would do to try to make it work.