First CRE deal on Seller Financing! Help with my structure
 

This has been a long negotiated deal and I want to make it work, but I need professional advice. Under contract in SE PA. The property is zoned C-1. It currently has 4 newly constructed Studio style apartments. Very high quality for the area, but due to being studio's I project gross monthly rent at $3300.

Property specifics:

The upper units have never been inhabited, they are new construction. The building was purchased for $120,000 in 2017. It was a vacant warehouse. Since then seller has had PEX, Electric, and the 4 700-1100 SQ/FT studios constructed on the upper floor. Street level is concrete floor, warehouse style, and unfinished

\- 2 Story, 14,000 SQ/FT, the upper level is where the 4 units are located, lower level is concrete floor and pending township approval could hold the same 4 studio unit layout or storefront.

\-Needs new meter base installed to divide electric bills

\-Whole building needs sprinkler system before it can be rented.

\-2 garages that could be rented at $75/m

Taxes: 6200-7000

Deal specifics:

PP: $410,000

$20,000 DOWN-5% interest paid on a 30 year AM schedule- 6 Year Balloon.

Is there a deal here with this financing and value add opportunity alone?
[{"id": "huxm8bz", "text": "*\"Is there a deal here with this financing and value add opportunity alone?\"*\n\nYes.", "replies": [], "depth": 1}, {"id": "huz9eyf", "text": "Is this unfinished? Are the upper units occupied? Confused about the first floor situation. For the down payment I\u2019d probably roll the dice as long as there isn\u2019t a personal guarantee but the initial construction sounds like it\u2019s got problems.", "replies": [{"id": "hv2f3sr", "text": "The upper units have never been inhabited, they are new construction. The building was purchased for $120,000 in 2017. It was a vacant warehouse. Since then he has had PEX, Electric, and the 4 700-1100 SQ/FT studios constructed on the upper floor. Street level is concrete floor, warehouse style, and unfinished.\n\nI worked him down to \nPP: $340,000\nDownpayment: $20,000\nInterest: 4%~ 6 year balloon", "replies": [], "depth": 2}], "depth": 1}, {"id": "hv897cp", "text": "20k down on 340k purchase (94% LTV)? Sheesh.\n\n$320k loan at 5% and 30 year amort is $21k in debt service. \n\nAt $19k NOI (50% opex) you're cash flow negative. 35% opex and you're at ~$5k in net cash flow, or $600 a month ($107/ door per month). I'd need $200 a door to do something like this. That also isn't including any vacancy factor.\n\n\nCash on cash return is decent, but its only there due to the ridic leverage. One sizable repair item per year wipes out cash flow. \n\nSeems like more of an appreciation play if anything, in which case I'd look for a hotter market. I would not lend on something like that personally but your risk tolerance may vary.", "replies": [], "depth": 1}]