Cash Out Finance Or Not
Ok well, if you haven't read the other posts I have talked about this, I am getting ready to buy 6 section 8 rental units, all SFH 3bd/1ba . I am paying $39k each, each needs about $7k in repairs. FMV $75K
The city ( I am guessing) has blocked off the entire street and marked it as a construction zone. Every house on the street (which there are only 20 to 30 of them) is going to be rehabed, some are going to be for sale there is a big sign on one side blocking the road placed by a contracting company, selling them for $75,000 each(after rehab), so that's what I am going by FMV $75K. Ok I don't know why this was important....back to my situation.
The wholesaler who I contracted with told me, I should be able to cash out about $10k per house at closing (when I refinance after rehab) with a 90% FMV mortgage.
Well, I'm having a hard time getting the numbers to work, with the analyze tool on this site. Section 8 pays $650-$700 for 3bd homes...since the entire street is being rehabbed I'm hoping for the best ($700). I don't know for sure what interest rate I will get, I am guessing 8.5% , which is what I have been quoted for on my other transaction. The taxes on each home is about $720/yr I am figuring $500-$600 insurance (do they offer discounts on insurance with for muliple properties?). Ok and that is about all the info I have off the top of my head. Oh management company is 10% of rent. I may also try to bargain down to 9% or 8.5% . I have been trying to figure out a way to cash out and still get a positive income.
Would you suggest just financing my costs (price of home, repairs)? They way I look at it, $60,000 at closing can allow me to do more promising deals. But I would like to at least be ahead with some pos cashflow with my rentals.
I guess I could try to figure a way to do both, refinance for less than 90%.
I have posted this quite a few times in this forum, not in such detail, but I'm hoping to hear something from someone
who has been in this situation. When I am accounting for expenses on a rental, I am accounting for mortgage, taxes, insurance, and management. As far as reserve, I am willing to throw a chunk of my cash out into an account for a reserve.
What would be the best way to go on this? Cash out 90%, cash out less, or finance the costs to fix and buy?
Do you see anything wrong with the way I am accounting for expenses on this?
JB
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Ok I think I answered this for myself, and I posted it in a more related forum this time. If you're interested in what I came up with I posted it in the financing/notes/mortgage investing forum.
JB
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