Looking to buy a fourplex.

[Mario Cantu]

I am in the process of trying to buy a fourplex property without a down payment through an owner finance agreement. I do not have anyone close that I can discussed this over with to get and outsider view point to put a value on this deal. I have recently met with the owner to present my proposal and have to come to this conclusion thus far.

I am offering a purchase price of $230,000 based on $82.2 per square foot for owner financing terms at 8% interest rate for 30 year term with no balloon due..

Break down:

$230,000 at
8%= $1687.66 principal and interest payment.

Taxes= $1314

Insurance=$2060 for $299,000 of coverage.

Total cost for monthly payment estimate for P&I, Taxes and Insurance=$1968.82

Rent roll:

APT. A =$650

APT. B =$650

APT. C =$650

APT. D =$750

Water Owner Paid=$100

Total rent
roll= $2600 with water deducted.

Monthly maintenance cost (rent roll x 10%) = $270.00, I do most maintenance anyway, but factor this as a general rule of thumb.

$2600-1968.82=$631.18- $270(Maintenance cost) = $362 cash flow.

The rents are below average and I believe have a lot of room to increase, but am only considering this at today's prices. The condition of property is good, with new updates in the last couple of years such as; roof, hot water heater, inside ac units in all four unit with two new outside ac condensers and new electrical panels with breakers. I am also going to try to negotiate a 7.5% for 25 year term to help improve my sweat equity. Please help with providing feedback. I personally think this is a no brainer considering no money down, but I could also be wrong. Thank you for reading.