One more thing I just thought of which may play a factor.

You can factor 10% for repairs and CapEx which helps your cash flow.Then Option 1 doesn't sound so bad having all of your money back and $150/month.

Now if I just work off my desired profit of $20k and factor all cost in I can go up to $95k which is what I’ve offered after my low ball initial offer was rejected.

Would you factor in a rent cushion, if so how much?

We factor in about 2.5% of purchase price for yearly taxes, 5% vacancy (ours is closer to 2%) 15% of rents for repairs and capex combined, we self manage so no PM, and use 2% for rent growth (ours is about 4%) and 2% for property value growth (ours has averaged about 3.75% in our area over 30 years). 

My opinion is that this is really a personal choice and a factor of you and your wife's outlook on risk vs. opportunity. 

I’ve built a mobile friendly web app designed to organize information for landlords and I was planning on adding applications to it next so this is good timing.

Hi All. I am improving the kitchen and need your advise on the backsplash tiles. I had mirror doors and have already replaced them for frosted glass, I still have to rearrange the shelves as they are visible through t...

sounds like you have a great opportunity. i recommend the contact for deed route. as you mentioned you can get a lower down and more flexible terms. if you can get a 10-12 year ballon payment you should have no problem refi'ing out prior to that with a conventional loan and pay off owner contract. i would try to get the per unit down. you could try to show the total amount you would be paying when you add interest into the equation and see if he will come down on asking price, at least to market if not below. as well as play up the continued cash for with zero management headaches. ultimately if it cashflows well and you have good fixed debt for 10 plus years my experiences has been that price per unit is less of a factor. cash flow is king.

I believe the 1.3M was assigned something like 800K in land value and 500K in re-design and physical improvement cost (we had an approved but not yet built 45 unit apartment addition to the existing 135 units which required design revisions).