Raleigh, NC - Park Glen Condos - owner financed

[Uriah D.]

I have an opportunity to pick up 2 condos in Raleigh, NC. These are b- to c properties IMHO. Market value is 45-48,000. I can purchase both for 40,000 each (80,000 total). Owner wants 12,000 down and 600/month for both. 0% interest! My biggest concern is the HOA not having enough reserves. It wont cash flow a bunch for the first couple years, but its paid off in 9.5 years and equity build up is $7,200/yearly on both. They have pushed the 10% allowable HOA dues increase for the last several years and my guts says this may not stop for a couple more years as they are aging ( built Mid 80's). I don't particularly see an assessment coming as it hasn't been proposed lately and since the lower income owners probably aren't going to vote (2/3 needed) for a large assessment when they can just pay the monthly HOA dues as they increase. Capex is lower than sfr as the HOA maintains the exterior.

Monthly Income: 700

Monthly Expenses: 533.75

Monthly Cash Flow: 146.25 (not including capex)

Pro Forma Cap Rate:13.17

NOI: 5,533

Total Cash Needed: 8,000

Cash on Cash ROI: 21.94

Purchase Cap Rate: 13.83

Paid off in 9.5 years

Would you go through with this?