Over Analyzing a Multi Property Deal?

[Cameron Godsill]

Hello Everyone,

I am looking at purchasing a group of 5 SFH from a local investor whom is friends of our family and I have done work for with my other business. I am wondering the best way to analyze this deal. He is willing to hold back 15% on a ten year note at 6%. Each property comes out to about $85,000 and they rent out for $875.00 a month. These have and are rented out, (For the sake of keeping the post short) These are mostly 3-4 beds, 1-2 baths all but one has a garage. I know in this market the rents are lower than they could be. We have a couple large investors that have well over 50% of this areas market and they have pretty much kept the rents flat. I live about 20 miles from this city and these would rent for closer to $1100-1200 per month. I may have some wiggle to raise rents and such. Anyways, I am having trouble with over analyzing the numbers and this deal as I keep going back to the lower rents compared to my area. However I am getting a great beefit from the seller with financing, I only need to put 5% into the deal and I am doubling the amount of properties in my portfolio with this one deal. Also I have the option to do this same amount and structure with this seller over the next few years which could land me 20 SFH with little money into the deal. I hope I have not trailed off in this. I don't want to over analyze yet don't want to get overly excited. Would love to be closer to home but know I am basically getting 5 properties through this as opposed to one in my area. Which in this area the numbers don't even get me close to the 1% on purchase prices. Rentals seem to be selling for a .5% or less.