Just need a second (or third) opinion

[Wesley Woo]

Hi everyone!  I've been listening to the podcasts and have been lurking a bit on the forums.  Now, I've decided to jump in with my first post and would like a second opinion on a negotiation.

I own a duplex literally around the block from the current target so my assumptions are based on experience from that building.  Looking at a 2,600 Sq Ft duplex with 3/1 on each side.  One side occupied at $650/month and other side currently vacant but move-in ready (I think owner was looking to sell to owner-occupant).  Rents are somewhat below market and have some upside, but for the purpose of this analysis and to be conservative, we'll go with $1,300/month in total rent = $15,600/yr.

After one round of negotiation the asking price is currently $86,000. Taxes are $2,000/yr, insurance = $950, sewer = $360, tenants pay all other utils (electric, gas, water). Using 10% vacancy and 10% maintenance reserve = $3,120. So, $15,600 rent - $2,000 taxes - $950 insurance - $360 sewer - $3,120 Vacancy and Maint = $9,170 NOI. Anything I'm missing to calc NOI?

Using the $9,170 NOI and my "walk-away" purchase price of $82,000, I calculate cap rate of 11.2%.

Here's the kicker: seller financing.  Currently at $10,000 down payment (12.2%) with a 5% note fully amortized over 15 yrs = $570/month. No balloon payment (as of yet!).

On a monthly basis I'm looking at: $1,300 rent - $535 expenses - $570 mortgage = $195 CF/month and CCR = 19.5% (assuming $12,000 cash at close).

So, I think this a good deal with conventional financing and an even better one with the seller financing (esp. w/ seller holding paper for 15 yrs).

Any suggestions on better assumptions is much appreciated and I would like your thoughts on this deal and on the financing aspect in particular since this is the first seller financed deal I've encountered.

Thanks to all!