An added benefit is that the payments decrease when the loan adjusts if you prepay the mortgage to maintain the same amortization period.

It cost so much more to maintain $100k in coverage when I might only need $50k in 10 years.

I'd happily maintain my position I've posted before that I would fully support Obama or Hillary cleaning this one up Vince Foster style.It has to be far more legal than the kill order Obama put out on that American citizen Imam overseas.

I would steer clear of that if your intent is to maintain ownership until the option is exercised.

Property Description:2 building 9 unit apartment complex located in a downtown area of a Midwest city with inter-state, water, and rail transportation systems in place.The building is about 40 years old, but has been maintained very well.Building is 11750 Square footThe lot size is 16350 square footNew roofUpdated interiorhard wood floors, crown molding, and French doors.Units: 5 3 br, 3 2 br, and 1 1 brGross annual rent $55620, 1 3 br is vacant, rent would be $750 per month.Asking price $400,000.00Seller agent claims NOI is $43200 per year, with taking in to account the one vacant unitSo, if NOI is correct, the cap rate would be10.8.Using the 50% rule the cap rate would be 6.95.Assuming the complex was full, the cap rate, 8.08.Not sure who pays the utilities, I am still waiting for the seller's agent to send me more info.Cash flow:Gross rent $55620.00 with current vacancy.Expenses 50% rule $27810.00Per unit $257.50 per monthNOI $27810.00Seller is willing to finance 80% at 7.5% over 30 years with a balloon payment in 5.P&I $26849.88Leaves $960.12Or $8.89 per unit per monthNow, I am just getting started, so I have exactly no cash to put in to a deal, unfortunately.Assuming similar terms for a loan for a 20% down payment, but with a 9% interest, that would be a payment of$643.70Per unit $71.52Net cash per unit of $-62.63At the asking price of $400K, I think this property is over priced.

I'm working on a lease option deal and have a few questions on the details.Insurance: I assume the seller maintains the homeowners insurance and the tenant buyer has renters insurance?

It provides liability protection if you maintain it properly.I think a LLC is the safe way to go for you guys.

The NC Secretary of State maintains the forms necessary for the merger.

This takes quite a bit of time to setup and maintain, but I for one can tell you that the time investment has been well worth the payout.Curt, I agree 100% about your comments about putting together a system for your buyers.

I often end up needing to go to Home Depot because they tend to maintain a good stock and seem to have the items I'm looking for.