8 unit seller finance offer

[Thomas Handy]

I am talking to the broker who listed the 8 unit apartment and the seller is open to owner financing. The seller listed three properties, a 8 room ($382,000), 12 room ($565,000 and 16 room apartment ($795,000) complexes. I am putting in a letter of intent for the 8 room apartment.

This is my first offer on a commercial property, since I have only done SFH so I could be missing something in my analysis.

Since I don't have a lot for the down payment, I was planning to offer $20,000 down with a 30 year loan amortization at 6% interest. This comes out to $2170.37 for the seller.

The apartment was built in 1962 and in a B- part of town.

The cap rate is 8.5%

All rooms are occupied with a gross scheduled income of $49,077.

Operating expenses are $16,613.

Net operating income is $32,464.

INCOME SUMMARY

8 units income $49,680

Laundry $1980

TOTAL $51,660

EXPENSE SUMMARY

Property Tax $4262

Insurance $2807

Water $3700

Trash $1080

Management Fee (3%) $1472

Common lights area $500

Repairs and Maintenance $2792

TOTAL $16,613

NET OPERATING INCOME $32,464

What are your thoughts?