Owner Financing Deal - Just Because ?

[Nick Aalerud]

Hi folks!

A colleague of mine brought me an interesting question.  He's gotten a couple sellers to agree to finance him their rentals (details below).   I have my own opinion, but I told him I'd put out on BP and see what others thought.  

Deal #1:  

1-Bedroom Condo

Rent:  $850 / mth

Taxes:  1358.97 / yr

Condo Fee:  $114 - INCLUDES HEAT, tenant pays electric

Needs roughly $2K in cosmetic work

Owner Agreed to:

Purchase Price:  $85,000

4.5% interest rate

monthly payment of just under $413

downpayment of $3500

mortgage amount of $81500

Important to note here, there are no comps in the last 25 years for 1 bedrooms in complex.  2-bedrooms have been going for about the $85K... so take that into consideration.  

Questions would include:  is this a deal?  Would you do it?  Why / why not?  What would make you do this deal?  What strategy would you use?

Deal #2:  

Single Family Home - 4 beds + bonus room, 1.5 baths.  Approx 80 years old, though renovated 6 years prior.

Rented for $1550 / month, utils paid by tenant.  

Agreement:  

PP:  $160K - $180K (still being negotiated)

Down Payment:  $15-20K (still being negotiated)

Expenses:

Taxes	$ 4,305.00
Insurance: Property	$ 1,500.00
Insurance: Mortgage	$ -
Maintenance
Snow Removal (75 / storm * 10 storms)	$ 750.00
Landscaping	$ 250.00
Pest Control	$ -
Other Repairs	$ 2,000.00
Marketing / Leasing Fees	$ 1,500.00
Legal	$ 600.00
CPA	$ 500.00
Utilities	$ -
Electric	$ -
Water / Sewer	$ 1,200.00
Gas / Oil	$ -
HW	$ -
Waste Removal

Note:  Comps for 4-bedrooms homes in this area, are comping out right at $160-180K.  

Questions:  What would make you do this deal, if so?  if not, why not?

Thanks for your feedback, peeps!

~ Nick