4-Plex Deal Advice

[Mav Larson]

Hi Everyone, 

Thanks in advance for your advice/comments. 

4-Plex for sale near a major university. It's located just on the fringe of expensive student housing. This 4-Plex, along with several of the other 4-Plexes along this street, have been neglected for awhile. The university keeps expanding, student housing keeps spreading, and this area is in the path. So although it's not in that great of a neighborhood now, it's right around the corner from a great neighborhood and will eventually become noticed by other investors. 

This particular owner is retired, its his last property, and he's willing to do owner financing with only $20,000 down.

Here are the numbers:

Price: $240,000

Current Rent: $2,000/month (4 x $500)

Insurance + Taxes: $426/month

There's about $15,000 of deferred maintenance, and although very little has been updated since 1985, the building is in pretty good shape. With even a little rehab, rents could definitely be $600 - $700/month. The student apartment complex behind the property rents for $1,000/month.

The seller is flexible on the terms of the sale as long as I "don't try to low-ball him." 

Here's my question: I think I'm overpaying at $240,000. But with only $20,000 down, and if I can get the mortgage payment lower than $1,000/month, is it worth paying the $240,000? This isn't definitely not a steal. But it's owner financing, with only $20,000 down, and in a neighborhood that will appreciate as a bonus. 

Your thoughts?

What about someone who has experience with 4-Plexes as I have only done strictly class-B commercial up to this point.