Seller financed cash flow deal

[Samuel S.]

Hey BP folks,

Was hoping I could get some advice from a few seasoned investors in this particular situation I’m in.

I'm a fairly newer investor with several units, all of which I've been able to purchase in relatively good areas. Just recently, I've been able to get a converted duplex under contract for 8k down seller financing, which will cash flow around $500 after PITI. A local investor had purchased it a few years ago for 16k, and since has made some cosmetic renovations such as new siding, windows, flooring etc.

Here are the numbers:

Purchase Price = 63k

Down Payment = 8k over 30 years @ 6.57% w/ no balloon

PITI = 587

Landlord paid gas = $150

Monthly Outlay = 737

Total Income = 1300 (650 per side)

Cash Flow = $563

On paper I feel as though this is a good deal. The only downfall is that the location is not the most ideal. I wouldn't classify it as awful, but a C, C-, with drug use being the main issue. That said, it’s really not in "that bad” of a neighborhood, as it’s right off a main road relatively close to a downtown area with a pretty large tenant pool.  There are definitely much worse parts of town, but there are definitely better parts of town as well.

I am really just trying to get some advice on if I should pursue purchasing this deal.  I probably wouldn't make it a point to continue purchasing in this area in the future, but right now I am just trying to grow my RE portfolio with solid cash flowing deals with a lower amount of cash into the deal. I would be purchasing this property at somewhat of a premium price (50k is avg for duplex in this area), albeit with attractive financing.

Any advice would be greatly appreciated!!