Mark,
What is the cash flow on the property? Is it worth 175k? I severely doubt it has positive cash flow or any equity. My guess is you would be paying more than it is worth. Even for no money down, it’s a ‘pass’ in my book. As for haggling down the price or terms, why don’t you ask him? Point out the problems above…
30 yr old Duplex in exellent condition
Cuurent tenants rents @ 720 & 850
Owner Financing 30 yrs @ 7%
Price 175,000
Owner is taking installments for tax purposes. He has several properties like this one. How can I arrange to purchase all or some of these properties at minimum cost?
Also the price seems a bit high when considering cap rates. But I am putting no money down and it is a growing area. How can I haggle down the price or terms?
Also how can I protect my interests if this guy dies, re-finances …ect ? How should I structure the contracts?
Posted by Karl Grube on June 03, 1999 at 19:09:10:
Here is a way to check out your $175,000 price. Put together a local contractors duplex turnkey price. You can also use a Marshall-Swift Construction computer projection for your area. Insurance companies use this technique for structural replacement costs.
The rental units should come in at $75,000 each or less to make your rental numbers work. You will have no problem getting $875 each for “new” units. if you hold these for five years, you will have a great asset to sell on contract or even for cash!