Deal analysis on 4plex - Subject-to and owner held note

[David S.]

I'm looking for some opinions on a potential deal. 4 plex in a suburb of the Twin Cities. Owner has some interest in selling does not seem super motivated. He's asking for an offer, and says he's willing to both do a subject to the existing mortgage, and carry a note. I'm a bit worried about overleveraging, but this could be a nice no money down deal that cash flows. 

Numbers:

He owes around $240k, 12 years into a 30 year ARM, currently at 3.25%. Payments around $1300.

Property a block away with identical floor plan sold in February for $309.5k

It's a 4/3/2/2 fourplex. His claimed rents are wildly high($5200/month). I estimate closer to $4100. Expenses I'm estimating around $1675 a month. That'd leave around $2k for paying the mortgage, and the note. I want to offer him $50k at 4 or 5% over 10 years. That puts both mortgages together around $1750, leaving $250 a month in cash flow. I could probably see more like $400-500, but I used very conservative rent numbers, and slightly higher expenses since I haven't seen the property in person.

Does this deal make sense? If he counters and wants more, what are some reasonable options? I could pay him a decent sized downpayment, or probably even purchase this with a conventional loan - but then I lose the principal paydown with the original mortgage, plus I want to have less cash tied up. 

Other options I'm considering are a $10k down, $30k note, or if he really wants more money, extend the note to 15 years, and higher principal.