She and her ex husband are prepared to take a loss of $25k (loan is currently at $174k).

Scheduled Gross Income: $89,100 Vacancy: $4,455 Effective Gross Income: $84,645 Maintenance: $8,800 Taxes: $8,015 Insurance: $3,500 Other Expenses: $5,925 Total Expenses: $26,240 Net Operating Income: $58,404 Debt Service: $49,500 Pre-Tax Cash Flow: $8,904 Here's the way I see this deal: $7,424 per monthOperating Expenses: $3,712NOI: $3,712Debt: $4,125 per monthMonthly LOSS: $413 OUCH!

Took one year to sell and wound up with enormous expenses and a "tremendous loss" in value.

Even so, it sounds like you may well show a loss.

However, even if we use your numbers, this is a very poor deal.Gross Operating Income $1,519,291 $1,559,291 Less Expenses $518,179 $472,297 Net Operating Income $1,001,112 $1,086,994 Debt: ($9,975,000, 20 year, 7.5%) $964,296Cash Flow: $3,086 per month ($36, 816 per year) or $14.82 per unit per month.If anything is not as you hope or anything changes (like your debt adjusting), this could easily lose a lot of money.Using more realistic operating expenses, this deal is even uglier:Here's how I would evaluate this deal:Gross Operating Income $126, 608 per monthOperating Expenses: $63,304 per monthNOI: $63,304Debt: $80,358Monthly LOSS: $17,054I would suggest contacting the National Apartment Association or another apartment/landlord association and researching the operating expenses issues.

Ok, here it is:My offer is 173k with 13K back at closing.Total Purchase Price $173,000Seller Concession $13,000 (roof repairs and closing costs/fees)Downpayment (15%) $25950Debt Service: $1330 per month Finance $147,000 x 9%= $1330Gross Rents: $2775 $400 (15% vacancy/rent loss)Effective Rent: $2370 Expenses $1100 (water, insurance, taxes, trash, grounds, misc.)Do I buy or pass?

Is it feasible for them to go for 70% of list price?

We do deals primarily USA and some Internationally when feasible.

The only potential for loss is when they bail on you AND trash the place within the first couple years, which is admittedly a lot more likely to happen in low-income neighborhoods.

You would have to go through the numbers, but you have to recognize this as a sale and use the 1099-C as your proceeds and show your gain or loss on your schedule D.If this is a personal residence, then they may not issue one, but if they do, then you simply have the proceeds shown and the purchase price + whatever improvements you made and show a disallowed loss on the return.Joe