5-Unit Update

I've been neck-deep at work, so I've had very little time of late to devote to REI. After putting off running numbers on the 5-unit, I decided to just set everything aside for an hour one day and just do that. I wrote-up three different offers, all of which I doubt will be accepted, but I'm hoping at least the owners will start negotiating. The three offers I presented to my agent were:

Offer #1

All cash offer. The amount is almost $17,000 below the asking price. I did this because my target all-cash offer is actually about $9,000 below asking price. I figure if they shoot it down then I've lost nothing (except a few minutes of my time), but if they counter or accept, the ball is back in my court. The offer will give me an average monthly NOI of about $700. I added a bunch of the usual contingenices, along with the following statement:

Seller Advantages: Total proceeds from sale of property are immediate. No longer burdened with mortgage payments, if applicable. No worries about property management and/or tenants.

Seller Disadvantages: Lump sum payment may include a heavy tax burden. No more income from property. Lower offer.

Offer #2
100% owner financing. Offer price is almost $14,000 higher than the list price. If accepted, the deal should net me almost $400/mo in positive cash flow. As with the Offer #1, I added the usual contingencies, along with the following:

Seller Advantage: No worries about property management and/or tenants. Much higher offer - almost $14,000 more than list price. Steady stream of income. No lump settlement - lower tax burden. No worry that buyer will refinance.

Seller Disadvantages: No more income from property. No immediate lump settlement.

Offer #3
Hybrid financing. I'd put down 20% and have the owner finance the remaining. Offer is about $4,000 higher than the list price. As with Offer #2, the deal would net me an average of almost $400/mo in positive cash flow. Again, I added the following:

Seller Advantages: No worries about property management and/or tenants. Higher offer - almost $4,000 more than list price. Steady stream of income. No lump settlement - lower tax burden. No worry that buyer will refinance.

Seller Disadvantages: No more income from property. No immediate lump settlement.

I told the agent that all the offers were negotiable (and, in fact, short of the owner accepting any of them, I hope they counter). The agent mentioned before the owners were not interested in owner financing, but I wanted to give them a realistic picture of what windfall they can receive by doing it in the hopes they would change their mind. The Seller Advantages/Disadvantages were partly thought-up by me and partly taken from a REI book I have. According to the agent, the owners are elderly and recently moved out-of-state, so I'm hoping by planting a seed of "steady income" in their minds, they'll opt for one of the owner financed routes. But, if not, I made my all-cash offer low enough to leave some negotiating room. We'll see what happens.

BTW, I am still drafting the commercial loan proposal to send to the local bank. The rep told me everything he'd need in order to review. I have all of the information, but I just need to set aside another 60-90 minutes to put it altogether into a nice presentation to send him. If only I had more time ...