Would you do this Owner Financing Deal?

[Mitchlyn D.]

Details:

   Property type:  Two duplexes side by side

   Owner Financing Purchase price:  $220,000($110k each)

   Downpayment:  $15,000

   Loan amount:  $205,000

   Interest: 6%

   Loan Term:  15 year

   Monthly Principal and Interest:  $1,730

   2019 proposed taxes:  $2,369($197.42 monthly)

   Current rents:  $2,460($615 per unit)

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So with principal, interest, taxes and insurance, the total expense comes out to:  $2,127.42 monthly.

    Current rents are $615 * 4 units = $2,460.

     $2,460 - $2,127.42 leaves a monthly cash flow of $332.68 without setting aside monies for vacancy or repairs.

    Owner mentioned a scheduled increase in all units Jan 2020 to $665 * 4 units = $2,660

     $2,660 - $2,127.42 leaves a monthly cash flow of $532.58 without setting aside monies for vacancy or repairs.

Another caveat is, market rents are around $700-$800 for this area.  So my question is, do you think this is a good deal or not?  I sill would need to do an inspection but based on the numbers, does it make sense?

[Mitchlyn D.]

@Aaron K. - Because of the downpayment.  Banks want at least 20% down.  So on 110K that comes to $22K just for one duplex.  Thats the one big reasoning we were considering owner financing.