Rental property deal being discussed with the seller

[Rob Else]

All,

I am new to real estate investing and I'm still looking for the right deal to be my first deal.  I keep looking and talking to sellers to try and get experience as well as the first deal.  I wanted to get everyone's thoughts on this property.

It's a SFH with 1300 square feet. 3 bed/1bath. It currently rents for $875 per month and the tenants just signed a new 1 year lease.

Annual income = $10,500

Less Vacancy = ($1,050)

Less Capital Ex of 10% = ($945)

Less Property Taxes ($1300)

Less Property Management ($945) - I will self manage to start out

Less Other expenses (Ins., admin, etc) - ($2,000)

NOI = $4,260 per year

The list price is $53,500 for the property.  Other comps in the area seem be listed at $70,000.  I have not seen the property yet to know what kind of repairs are needed.  The property sold for $72,000 in 2007 to the current owner who is looking to get rid of it.

The seller is motivated, although he hasn't said why - just personal reasons, and said he is open to seller financing.  What would you think of this offer to the seller?

10% down payment of $5,300

Finance the remaining $48,150 at 5% for 30 years = a monthly payment of $258.

My cash flow would come out to $100 per month, but my cash return would be 21%.