[QUOTE=Brandon (NE Indiana);883111]I may have an opportunity to buy a 14 unit complex with as little as $10k down in actual cash and have the balance carried by the seller for up to 20 years at around 7%. His price is higher than I feel theyre worth yet they would still cash flow a little with these terms. Im thinking the long term financing and potentially never having to go the bank adds some value…but how much?
ROI would be through the roof…
Find out what he would take on a cash sale to redirect his thinking towards a lower price, and start negotiating towards that number.
Understand there is a point in landlording where you have enough work to keep yourself very very busy, and not enough work to employ staff full time. Which means your commiting to a ton of personal involvement (somtimes at very inconvient times) at least temporarily, and possibly a very long time.
My experience is such that I believe that point to be around 20 units. If you have a plan to get firmly past that point, then its possible the financing arrangements will be ok.
If your plan leaves you stuck in that 20 unit range, you will need your ROI absolutly through the roof, because even a one hundred percent return on 10 grand is only 10 grand, which wont be worth it. The fact that it isnt worth it leads to the inevitable outcome where the seller gets all the property back.
So I would say proceed negoiating with the seller, and use extreme caution towards long term debt commitments.