Ready to make offer tomorrow--feedback please!

[Page Huyette]

I'm ready to make an offer with a seller financing contingency on a fixer duplex tomorrow, and would greatly appreciate feedback on the terms I plan to put in the offer:

Asking price: $325k. College student rental needing lots of cosmetic work, future roof, general cleanup. DOM around 50 +/-

Pluses: very good location, ability to build 3rd unit in back in the future. Easy to rent, room for rent increases with upgrades & clean-up. Separately metered for gas/elec.

[/b]Minuses:[/b] High prices in this town! Roof needed in about 2 years, asbestos siding should be replaced eventually. One water meter (could submeter if necessary, but for a duplex?)

Here's what I sent over to my agent for discussion earlier today:

$225k purchase price

Contingencies:

10 day inspection period
Closing in 3 weeks or less, dependent upon delivery of loan documents as described below

$1000 earnest money deposit
Buyer to pay closing costs up to $4000.00
Buyer to pay delinquent property taxes up to $1200.00 (approx 1170 delinquent less penalties, next payment due 5/30)

Financing provided by seller based on the following:

$18k cash down payment paid to seller at closing

Promissory note spelling out the terms and interest rate on loan & security documents to be executed by buyer's attorney; attorney fees paid by buyer. Collateral assignment of note and mortgage with legal description to be recorded with county.

Closing to take place through title co.

Balance of loan, less down payment to be financed by seller carried note @ 4.0% for 36 months.

Loan amortized over 30 years, payment due in full on or before month 36. No prepayment penalty. (need help with how to word what happens if month 36 comes--increased interest rate, etc. Assuming attorney will help with this language.)

Interest only payments for first 3 months during property rehab/re-lease period.

Monthly payments for loan, property taxes and insurance to be paid by buyer directly to third-party servicer. All account set-up charges and monthly service charge for loan service to be paid by buyer.

The way I have it calculated, I'd have about $24k to shell out, not counting rehab costs. Estimating rehab about 30k, with 20k ideally happening sooner rather than later, could be 8-10k but rents would suffer.

Plan is to keep upper tenant in place in nicer unit and rehab lower unit, then remove upper tenant, rehab and re-rent. After a year, refi into either conventional or construction loan to build separate 3rd unit depending on how year one goes.

Would LOVE comments, good and bad--thanks guys.

[Scott W.]

how do we know if it's deal or not if we don't have the rents & your monthly mortgage, taxes, & insurance (unless you're banking solely on appreciation)?