Possible deal, need major advice please

[Jake Engle]

I am in the process of analyzing a commercial property that I have an opportunity to purchase with owner financing and no money down. The property is a store front, with a large storage area in the back and two 3-bedroom apartments above the store. One of the apartments is in good condition and has tenants, while the other apartment is pretty much completely gutted and needs to be finished.

My plan is to convert the store (approximately 2000 sq. feet) and the back of the store (another 2000 sq. feet) into two more 3 bedroom apartments.

When all is said and done, I anticipate the numbers to look like this:

Gross monthly rent: Conservatively $4,000 (although $4,800 is realistic)

Taxes: $6,500

Financing: owner is desperate to be done with the property and is willing to finance a 30 year mortgage at 5% interest with no money down. I know you are asking why doesn't she just sell. The fact is that she went through a messy divorce with a very wealthy man and he has to purchase this building for her. He financed the building and still has 11 years left on the loan. If she were to sell the place and the bank took the payoff, she believes he would never pay her directly.

Rehab: I am in the very early stages of getting estimates on the rehab costs. This is a major undertaking that I anticipate costing in the ballpark of $100,000.

I understand there is a lot of info that is missing and factors to consider, but if the above was accurate, what would be the most you would be willing to pay for the property? I am in the early stages of trying to put an offer together, but any of your expertise would be very much appreciated.