First Rental
Here is the first rental I should be soon purchasing. Do you typically find rentals that cash flow at least this amount?
Asking price: $125,000
Attempted purchase price: $131,000 with $10,000 back at closing(DP for second rental), and $3,000 closing costs
PITI on $131k: $1055(I will be @ 9% rate)
Gross Income: $2400/month
After utilities(avg $500): $1900
Aftter Taxes($150): $1750
After mtg payment: $695/month cash
I will flow $695/month on this property and receive $10,000 at closing for down payment on another property.
Sound good?
You may have trouble with some lenders getting 10k back on that purchase as it is more than 6%.
I would factor in a percentage for vacancies and repairs as well but it looks like a nice deal with that income.
Also, PITI means principle, interest, taxes, insurance but below you add in taxes again, not sure if that is a mistake or not.
Again, sounds like a good deal, especially if you have a secured lease for that 2400 month.
GL
[addsig]
Apologize for the inconsistancies. I have troubles writing out my thoughts sometimes especially when it come to numbers. I should be able to get up to 8% back though my lender hopefully. I guess the closing costs would be considered part of the amount I would get back. Either way he will give me a max amt and I will take it from there. I'm glad I became good friends with a mortgage broker. Yeah even factoring in vacancies would leave it a good cash flow. One of the units is section 8, new tenant, but they looked fairly clean. Today I should be negotiating a subj-2 deal with my partner. Since I brought the knowledge to the table and he is negotiating the deal and paying the back payments/moving costs, I have to figure out what kind of "Cut" i should take. I figure i'd get all the paperwork together and take a 40% cut of up front, residual, and back end profit?
Quote:
On 2004-09-04 09:24, ray_higdon wrote:
You may have trouble with some lenders getting 10k back on that purchase as it is more than 6%.
I would factor in a percentage for vacancies and repairs as well but it looks like a nice deal with that income.
Also, PITI means principle, interest, taxes, insurance but below you add in taxes again, not sure if that is a mistake or not.
Again, sounds like a good deal, especially if you have a secured lease for that 2400 month.
GL
If the lender can do 8% back that is great (as long as that inflated 8% would not put it over the market value, that is illegal)
As far as 40% cut, will you be doing all the work yourself as far as property mgmt?
Sorry once again I ramble and mix things up.
No in addition to that rental, I am doing a subj-2 deal with my buddy. It's his "lead" but my know-how. We were going to just straight out list the property but the owner needs out, so I suggested subj-2 and explained to him basically what i knew, which was most of the idea. I am going to end up getting together the paperwork the seller needs to sign to give deed over to my buddy, etc. I am probably going to ask for a 40% cut. It is his cash investment to bring the loan current and his liability since the loan is his name, which warrants the little extra. Although we'd only make around $3,000 if we listed it versus $15k-$20k subj-2.
Quote:
On 2004-09-04 18:36, ray_higdon wrote:
If the lender can do 8% back that is great (as long as that inflated 8% would not put it over the market value, that is illegal)
As far as 40% cut, will you be doing all the work yourself as far as property mgmt?
To be honest, I am inexperienced when it comes to sub-2 deals, I cannot say if 40% is normal cut or not. If you did all the selling of the idea to the seller, that would certainly be worth something. There's a guy out here by the name of John Locke that is the sub2 guru.