A Rookie With A Few Basic Questions
I am in the process of securing financing for a few rental properties I would like to own. I am working on some no money down strategies and cashing out after closing to build up some cash reserves for future deals. My questions are as follows:
1)What is better. Offer the owner an all cash deal and pocket the balance of the loan or get him to carry a 10% mortgage. I have 90 or 95 percent LTV. just waiting to find out. The offer would naturally be way below the asking price so I can pay the seller with the loan proceeds and hopefully have some cash left over.
2) How does the closing process work. Do I take the loan from the lender and then turn around and pay the seller and hopefully have some cash left over?.Can I pay closing costs with that money too? I read that the lender is not supposed to know that you are over financed.
3) Does the lender loan 90% percent of the purchase price or 90 % of the property value?
4) What about low rent undesirable areas? I see fourplexes and 10 unit buildings fully occupied with good cash flow, but I am concerned about the area. Do properties in these area appreciate much? I am mainly interested in monthly income, but I worry about later down the road if the property is too much of a hassle and need to unload it.
Thank you all in advance. I am really excited about getting into this business, but I want to cover all the bases.
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