Buying out a person's LLC share

[Brandon Lee]

Hi:

I would like some feedback on a potential opportunity that has been presented to me.

A bit of context: I live overseas and have a very demanding job that I enjoy and so I don't have an interest in taking time to chase real estate deals. I invest in Provo and Salt Lake City Utah remotely and have a team there on the ground that take care of things incredibly well. I currently carry two mortgages on investment properties and don't want to carry another mortgage at the moment. I have a fair amount of money to invest in properties and so I am willing to give up a bit in terms of return on investment in exchange for minimal hassle and to not have to think about my investments that much. 

Here's the opportunity: I have a friend who owns a triplex with his partner and the partner needs out and is interested in selling his 50% ownership in the property. The mortgage is in the partner's name and he is willing to continue to carry the mortgage by maintaining a .5% share in the llc with no ownership rights (It goes without saying that there is a lot of trust between the three of us). 

Here are the details: 

Location: Provo, UT, C+ neighborhood.

Asking price: 273k

Amount left on the loan: 124k

Asking price for me to take over ownership: $68,950 (essentially ask price-mortgage + some negotiation around avoidance of realtor fees/closing costs,etc). This will be paid over a year in four installments, with no interest incurred.

Mortgage payment: $730/month

Property management and lawn care: $85/month (property manager is my current manager for the other properties I own)

Utilities not paid by renters: $45/month

vacancy rate: they have only had one month of vacancy for all three apartments in 5 years, so not a big deal.

repairs: minimal. The current owners have done all that is needed at the moment. 

capex: $180 (assuming 10% of rent)

Thus, total monthly expenses are ~$1040

Revenue from rent: 

$750+550+525=1825

Monthly cash flow: $785/2= $392.5

I would appreciate any feedback on what you think of the investment as well as any advice on this fairly idiosyncratic arrangement. 

Many thanks in advance.