Looking for advice from seasoned investors

[Nicole Walley]

I have an opportunity to purchase a multi family property from my landlord. He has owned the property for 30 years. I went to him a few months ago just to get a feel for if he would be interested in selling to me. I told him I may have a potential investor to work with, and asked him what he is asking for the property. Upon doing more digging the home is listed as a duplex, however it has five units. Four in the main house (2 of them are 2 bdrm and 2 of them are one bdrm) and the garage was turned into a one bedroom. After reading some threads, I’m wondering where I go from here. I plugged in the numbers at what he is charging rent now, which is way under market and compared it to at market now. The home is located in an up and coming neighborhood right downtown. I have been surveying friends, acquaintences and co-workers what they would expect to pay in a rental in my location and they are right on the nose with what I would want to charge. It is a 2,000 difference in profit monthly assuming all units are occupied. My plan as of right now would be not to collect any profit for myself until the property is paid off. If I do this, I will have it paid off in five years with interest at 20%. I cannot help but want to jump at this deal. The home is older, and I plan on sprucing it up just enough for now, and then once I have my investor paid off start putting the profit into the home to build equity. All things considered, my biggest worry is that something could happen with the zoning. I definitely do not want to get myself into a situation where I have fines up the *** if the city says it’s a no no. I feel like this home is a cash cow but being that I am brand new, I guess I need advice at what to forsee going wrong. Thanks for reading!