Analysis of first ever offer

[Darrell Lewis]

So I would like to get all of your thoughts on a property that I am thinking about writing an offer on. This would be my first property. This is a property owned by a friend of mine and it is not currently listed as being for sale. With that being said he has already told me he is very interested to sell.

I have a family member that wants to be my investor that is willing to give me a 100% loan for 15 years at 6%. I am thinking of offering $40,000. The current home owner has a mortgage for that amount and they have already told me they just want to get enough to pay the mortgage off. The home probably needs $5k-$10K in repairs and has an ARV of $80,000. It is currently rented for $625 for a yearly total of $7,500. I am estimating $500 in insurance (owner currently pays $481), $750 for repairs (10%), $750 for CapEx (10%), $375 for vacancy (5%), $750 for management (10%), $777 for taxes (actual numbers), and P&I of $4,050.48 per year. That puts me at a negative $452.48 for the year or $37.71 each month in the red.

The negative cash flow makes me want to say no, but according to rentometer the home should rent for $800 per month. Using that numbers it bring me up to a surplus of $137.30 each month. 

The current tenant is under a lease until September of 2019. Supposedly they are a great tenant. Would you just take the negative cash flow until September and then raise the rent or would you move on? Any other advice that you have or things I have overlooked would be much appreciated as well. Thanks for your advice!