Offer to partner or ask for owner financing?

[Nichole Ovens]

Hello all, I posted a couple days ago a about whether a 4-plex that brings in $2080/month was a good deal for $150k. I got a lot of good advice. I also mentioned that the owner ideally would like to sell me 3 properties in a package and would offer a discount if I bought all three. He wants to do this as a private party deal although he is a realtor. 

Here is the summary of the properties:

4plex - $150k

2 - 2bdrooms rent for $590/month ea 

2 - 1bdrooms rent for $450/month ea

Total: $2080/month

He says he has good tenants and he resents fixed it up. It is on a nice street backing up to a park. Probably a B or B- property in nice condition although I haven't walked through.  It looks like he did a nice rehab job and maintains well.

4bdroom/2bath next door - $114k

Rents For $950/month with a tenant. House is nice and could make more as an airbnb which is starting to come into our area more. Solid B house. Also backs to the same park with a very nice house next door.

2bdroom/1bath - $75k 

This is on a different street. It is also fixed up nicely, tenanted but probably a B- or C + street.

I am interested in posing a slightly different scenario.  I do not currently have the cash for the down payment for any of them. I am interested in the 4 plex but maybe all.

I would like to ask opinions about asking the owner to finance the down payment (what are objections, pros/cons, benefits to him and me) . How might I pose  this to his benefit and mine. 

See if he would like me to partner on the property or all three at a 60/40 split with the plan that I will buy him out fully after 2 years.

Lease  purchase.  I don't know if I would like to go this route as I would like to be able to claim all the deductions I can get on taxes. Can I still do this?

I am not interested in increasing my income...I need deductions as much as possible and want to build equity so that in 4 years I have something that will provide income so that I can afford college for my daughter.

Thanks for any suggestions or ideas. I love this Bigger Pockets community.

[Jerry W.]

The 4plex deal looks pretty good, but the house deal doesn't pencil out nearly as well.  If the seller finances the down payment and the bank doesn't mind, he might be ok with that.  I have done a few of those deals myself.  They do not cash flow very well however.  I would imagine you might lose money on the house based on the purchase price and current rent.  Be especially careful on the utilities on the 4 plex.  If the owner pays any of the utilities it will really affect the cash flow.  You also need a very clear idea how you will pay the owner off for the down payment.  Owners usually want a balloon payment somewhere down the road, and it will put you in a bind if you do have the ability to pay it.