Is This A Good Deal?
I am a newer investor, with just one property bought, fixed up, rented for 2 years and sold with a decease profit.
I am looking at my 2nd property and trying to figure out the best way to work out the financing and if its a good dead. I got a call about a 2 unit, in my town (were prices are increasing) for $55k. Its a forclosure and the 1 remaining tenant will be evicted on 8/7. The realtor called me today, and hasn't adverted the property as of yet...but the bank wants $55k. I'm thinking it needs about $10k in repairs. And I can rent each unit for at least $450. Taxes will be about $175 per mth.
Since I have GREAT credit and also a great debit to income ratio, I'm thinking that I should try to get as much as possible out of the mortgage with very little down payment and some repair money. I after a clean up the house will appraise for at least $80k to $100.
My bank that I have used up to this point are a little old fashion and haven't offered me the terms that I want...but I'm thinking that if I TOLD them the terms I want they just might give it to me.
So the question is...what are the best terms for this particular situation?
Should I do 100% financing...figuring my mortgage will be about $450 per mnth (getting the $55k needed for the property plus $10 for repairs)...so renting just one of the units will cover the mortgage. Am I missing something...
Any help is appreciated.
Yes, this looks like a good deal. I'd trot into the bank ask for the 100% LTV loan ($65,000) offer to put the fix-up money in escrow until repairs are completed if necessary. If they balk at the 100% LTV after that then offer to put $7,500 in a CD in the bank pledged (i.e. about 10% down) to be released if and when you have the property re-appraised after the renovation for at least $80,000.
Sorry about the decease of your profit, I've had some deals like that as well.
if the ap. is 100k its a great deal, if the ap is 80k its a good deal. i would want to "nail down" the ap. so i would know what kind of deal i had to better determ ine my profit margin. the 100% fin, could run you into www.neg.cash you dtermine if thats the position you want to be in. 100% fin. www.neg.cash flow or money down to produce positive cash flow........kenmax