Is This Worth It?
First off I would just like to say this forum is a big help. I am looking at buying two duplex properties. I want to have 100% financing and use my stated income since I am self employed. I have found properties and a lender who can make it happen but here is the question. Each property brings in about 975.00 per month and the payment would be 750.00 since there is no $$ down which leaves some money left over, would it be worth it? I know what ever I purchase will be for long term I have no intentions on trying to flip them. But for the long haul would this make a good investment? Oh and the taxes and insurance are included in the 750 payment. Thanks, Mike
[ Edited by mdavey8478 on Date 09/21/2005 ]
[ Edited by mdavey8478 on Date 09/22/2005 ]
You will be making $225 a month, and pay your mortgage! Definately a good deal. In my opinion as long as rent covers mortgage, you should be fine.
You may want to factor in maintainence as well. You can get a home warranty for $50/month that will cover most maintainence emergencies.
I agree this might not be a property you make money on month after month but in the long run ( you mentioned you were going to keep these properties) you will make out just fine.
I bought a property 14 years ago that did not cash flow at first but within 3 years it did. Now I am refinancing it and taking a bunch of cash out, so it was a great deal to me. It depends on what you are looking for.
Flip
This is exactly how my first property looked like - about $200 per month in cash flow... And I almost backed out thinking about what could go wrong...
A couple years later I am making more like $400 per month is cash flow on this very same property - due to rent increases and refinancing my original mortgage!
Good Luck!
[addsig]
I am sorry for my stupid question here....
Why are you buying a property at 100% value? Aren’t there other properties that will net you similar amounts but where you can create instant equity?
Besides I am not so sure I would buy the units if all I could see is at best a 100.00 per door return.
I think you need to weigh the risk as well as weigh the fact that you’re decreasing the availability of future, maybe better purchases, power since you have deteriorated you borrowing ability on a marginal return.
Don’t become one of the sellers we will buy from who is in foreclosure in a couple of years.
IBUYHOUSES, I was always taught there was no such thing as a stupid question : ) As far as I know the financing is the only thing that is 100% not the value. Each property has about 15000 in equity, which I forgot to mention in my earlier post. So if I had to sell ( which I have no intention of doing ) I could profit roughly about 30k.
15k isnt enough
Just my experience .... there is a reason why houses have been abandoned for a long. Sometimes the person is deceased and the estate has not been probated, the owner is a drug addict, the owner is mentally incapacitated, the family members hate each other, the property is condemned, etc. I have not had good luck persuing long time abandoned properties. Also, If they are getting the letters, they have already had 100 RE investor letters. I have good luck with recently abandoned properties or distressed properties.
But you could be the lucky one. But realize it will not be easy. Many have probably tried before you and there is definately a "situation" with the family or the house. Pay a private investigator to do a skip trace if you want to pursue it.
Brenda
A thought, maybe before you pay a private investigator to do a skip trace, you might want to do a preliminary title search. Either you can do it with the recorded documents, or a title company can perform it for you. You might see a very sizeable lien or judgement, etc.
Thats not a good deal at all.... Go buy something that has 50k value in it now and resale the thing....
Stay away from values almost twice what median home prices are.
You can make more money buying in taft or East Bakersfield with less risk.
Besides if you did have to sell there isnt enough margin to cover the expense....
If you want a good deal call me I sell you something that you can make money on.
Do you have a lease option tenant with 15 grand???
There is another flaw in your plan that noone has noticed yet.
You are giving the HML a first mortgage and the seller a second mortgage on this property. When you refinance, the lender will insist on having his mortgage in first position AND will probably not give you 100% LTV. What if the lender will only refinance or permit up to 80% LTV.
This means that you will also have to include the second mortgage in your refinance, and bring enough money to the settlement table to cover the difference between your new financing and the loan payoff amounts, not to mention the closing and settlement costs.
Of course, you could always ask the seller to subordinate his mortgage to a new refinance on the first, but the seller does not have to agree. Even if he does, the refinance lender will look at your total combined LTV and may not allow an LTV greater than 80% for all your mortgages combined.
IMHO.........................................NO !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!