My FIRST SELLER FINANCED DEAL - Need Input :)

[Neil Da Silva]

Hey BP!

I'm about to do my 3rd deal, my first multi family home. I'm buying a triplex, and the owner is willing to seller finance the whole thing! SO...I just want some input on how to proceed with this. My theory is as follows, I'd REALLY appreciate any input and or corrections.

THANKS ALL!

SELLER FINANCING INFORMATION:

Purchase Price $200,000

ARV: $250,000-$260,000

Repair Cost: $10,000-$15,000

Down Payment: $10,000 (%5)

Monthly Payment: $1000

- I'm going to try to get a no interest deal in exchange for paying all closing costs which I will estimate at around 7-8%, however even with interest at max 2-3% the numbers are still good.

PROPERTY INFO:

Triplex individually metered so utilities are paid by the tenants. Fully occupied at $750 a month rent total $2250 every month. There is potential to raise rents with some minor repairs such as replacing carpet, paint and refurbishing. I'm going with current rental numbers NOT ARV rentals to be conservative as I don't know when I will be able to get into the units as they are currently rented

Insurance: $125/mth

Property Tax: $160/mth

Property Management: 10% $225/mth

CAP EX: 5% - $112.50

Vacancy: 5% - $112.50

Repairs: 5% - $112.50

(property built in 1979) - I can raise repairs to 10% and still cash flow positively

My numbers have me at $402.50 POSITIVE CASH flow (before repairs), $134.17 per month cash flow per unit. Not bad for deal without the use of banks!

Because I'm only coming out of pocket for the amount of $37,500, $10k for the down payment, $15k for closing costs and $12,500 for repairs, my cash on cash return is approx. 13%. If I used a conventional mortgage I would have had to put down $40,000k for the down payment plus $12,500 for the repairs and $15,000 for the closing costs however, my monthly mortgage would have ben around $775/mth instead of $1000, bringing my yearly cash flow to $7536 and my cash on cash return to approximately 11%.

Looks like a great deal to me, I used the tools like the rental property calculator to help me evaluate this deal however there is no seller financing tool, how would I be able to do this with the available tools? They are AWESOME BTW :)

BTW, A big winning point to all of this is that the seller actually owns multiple MFH's on the same street, I'm hope to PARLE this into 9 units by way of 3 triples!

I would not know ANYTHING of the above if it wasn't for BiggerPockets, nor would I be confident enough to scale my SFH business by adding 9 additional units in ONE deal. Thank you so much for this plethora of invaluable knowledge!