Current Owner Wants Out

[Scott9876]

I've been talking with the owner of a mat around the corner and have posted a few times here about it. It's a 2-building 4-unit apartment with a mat on the 1st floor that has been closed since 4/15/05. The place needs work, a new roof on both buildings to start. I've read here about problems with homeless, break-ins, etc and hesitate. I got word from the mortgage broker that the bank wants 8.25% with 25% down over 15 years; I would choke on that. When I told the owner I was backing away he asked me what it would take to make this work. I've dreamed of owning my own business and am interested in the laundry business but not sure what to say. He was asking $175,000 and I offered $150,000 and he is willing. There are many apartments downt he street and, as I stand in front of the place from time to time, neighbors come up and ask if I plan to re-open it because many people miss it. Apartment rents total $2,300/mo and laundry was bringing in $1,000 - $1,200/mo. Any comments or advice?

[keepitclean]

Scott----I don't understand how you will choke on that. What will your monthly payments be after putting 25% down? Won't that be less than the rent from the apartments? If the tennants have a good rental history then buy the unit based on the value of the apartments alone. If you can....

[fishmanz]

That sounds like a motivated seller. He will almost certainly help you to finance the building with some kind of owner financing. You will not need to come up with 25% in cash.

Ask him to hold a note for a portion of the downpayment.

Give him a downpayment and ask him to hold the rest as a first mortgage holder or some of the ballence as a second mortgage. Offer to put the second on a different piece of property if you have one for more security for him. He would enjoy a feeling of security as the holder of the first.

Offer him a percentage of ownership. You are trying to create a feeling of Win/Win for him as well as you.

There are 100 different ways to make that deal work with little or none of your own money.

[Scott9876]

I'm having a problem with the 15 year mortgage vs a 30 year mortgage and the payments. Like I said, the place need work and I don't think I"d be able to manage the payments and still have the funds to take care of the repairs ... unless the owner can provide some help. I'm new to the small business world and I'm having problems coming up with a reasonable arrangement that I can offer him. Sorry, I sounds like I'm whining about what seems like a great opportunity, but afraid to get in over my head. I appreciate the suggestions, just unsure of how to proceed.