Buy 4, Sell 3, Keep 1 OR Keep all 4

[Shane Caraway]

I have an opportunity to buy 4 properties from a retiring landlord.

The deal looks like this.

$2500 down

274,000 purchase price

10% interest

PITI $ 2422.10

Max income would be $2850 (rent)

This obviously will not work when you include any taxes, insurance, management, or CAPEX.

The properties should be able to be resold for a little over 400 K with some light rehab. 3 of the properties have recently been rehabbed from what I can see. If I sold 3 of the properties. It would pay off the note and give me 1 property free and clear. If I have to hold the properties for very long this  (6 months), I would not be able to cover the carrying costs.

If I can get the landlord to drop to 7% I can even keep all 4, and have a slight cash flow, but very slow equity gain except the initial 36% percent that I bought them at.   

[Adam Bartomeo]

I would not take a deal with such tight margins but I would find a way for it to work. Based on the information it could be a sweet deal. I would recommend that you put more money down and ask for the rate to be dropped - win for the seller and double win for you. You will lower the payment by lowering the interest and the amount owed. Good luck!