I just came across a deal and wanted some outside perspective on it.
-4 unit building, 2 bdrm 1 bath units.
-Needs cosmetic updating; paint, carpet, cleaning, etc (no major gutting necessary)
-Tax value $155K, asking $155k
-Rents all @ $525, taxes @ $3700
-Currently only two units rented
-Owner is willing to finance entire purchase cost at 8% for 5 years w/ no prepayment penalty
NOTE-i havent seen the building yet, so info is based on what current owner is telling me.
Its not in a great neighborhood, but anytime the owner is willing to finance, especially in this market, it catches my eye. whadya think?
If an owner offers financing, I’ve always fought with what to offer! Should I still try to undercut their asking price, or accept “as is” since they are financing the deal?
My first thought is “Why is the owner offering financing? Is it because there is so much deferred maintenance that no bank will lend on it?”
And why are 2 units vacant? There could be many reasons for that: illness, age of owner, bad neighborhood, too much competition in rental market, etc.
I really like owner-financed units too. If these have some kind of problems, see what you can negotiate, like a lower interest rate. Once I bought some units and got the owner to wait 6 months for the first payment until I had it partially rehabbed and rented. If you are the only potential buyer you may get to cut your own deal.
Good luck, and let us know how it looks.
furnishedowner- all very good questions you raised. I ended up calling another very experienced investor that I work with and asked him about the neighborhood and he recommended staying away from it as its a pretty high crime area, and would probably end up being a headache anyway. but thanks for your help.
It seem strange that owner himself is financing his property. I would suggest to take help of local estate professional to get the facts clear and well enquired. Otherwise, deals seems OK.