Is this a decent seller financing deal for Central California?

[Logan Allec]

Bakersfield seller called me today. Has an SFR built in 1980 (roof replaced in 2011) that comps out at $100,000. He originally wanted $90,000 cash all paid at once, but he agreed to an $85,000 purchase price with 25% ($21,250) down with him carrying the financing at a 4% interest rate.  This would come out to a monthly payment of $300.

There's a long-term tenant in there who's not going anywhere who is currently paying $700 rent.  I estimate $235/month in additional expenses being conservative assuming that I manage the property myself ($90 property taxes + $45 insurance + $30 water + $20 trash + $50 maintenance reserve).  So that's about $165 cash flow per month.  $165 x 12 = $1,980 divided by initial cash outlay of $21,250 down payment = 9.3% return.

Is this decent for California real estate, albeit in Bakersfield?  Is $85,000 too much?  Or is the purchase price fine and my negotiating point, if any, should be my down payment to achieve a better cash-on-cash return?

I'm thinking I might as well just go for it just to get my first experience using seller financing, especially since it's only $21,250 that I'd be tying up.  Thoughts, anyone?

[Gene Hacker]

 Seller financing is always attractive but it has to be a solid deal. Treat it like any other deal.  Run the comps and a rent survey and crunch any other numbers you need to figure out how this deal compares to other homes for sale. Bakersfield has some war-zones that I personally will not invest in, but that is a personal preference. Just make sure your comps are all in the same neighborhood as just a few blocks can make a big difference.