Potential first deal advice

[Dan Nedvidek]

Good Morning BP,

I wanted to take a minute to lay out the details of a deal I am considering in Bowling Green, KY. I bought my primary residence a year ago and sunk a good portion of my free cash into the down payment. I came across a 3/1.5 SF with a 1/1 apartment in a converted garage up for sale that I am interested in purchasing. The deal was initially interesting to me because it as being offered as owner financed. The terms were a little aggressive for me, $89,000 with a $12,000 down payment. 6% interest amortized over 20 years with a five year balloon payment. The house is valued around 85,000. Both the three bed house and one bed apartment are rented by the same family. They just signed their second one-year lease for $1270/month. Landlord pays $125/month in utilities. I do not have the cash for a down payment right now, but I am thinking about going to a bank for a short term loan on the down payment amount, holding the house as seller financed for a year or so and then going back to the bank for a conventional loan to cover the remaining amount and refinancing that way. The house has had some minor upgrades (flooring, interior paint, new windows) and is already occupied, so I wouldn't have much going out in the way of initial repairs or expense. The house is located less than half a mile from the university campus in a neighborhood that is rough around the edges but is seeing some signs of growth. Three houses on the street are currently being gutted or have been bulldozed in preparation for new home construction.

Am i making this too complicated? I don't think I can realistically offer to buy the house from the seller outright since I don’t have the down payment money that a bank would require for a full loan. What's your opinion BP, am I making this too complicated or is it worth a shot?