First Timer- Looking At This Opportunity
Looking at an up & down duplex.
Asking price $144900. The original owner passed away and daughter lives out of the area. The property is owned outright by the daughter.
Each unit is very clean and in a nice neighborhood.
I am considering offering $110,000. The first floor is rented (lease expires in December) at $700 per month. The second floor is rented for $625 per month (expired in January). Area comps are about $850 per month.
The property taxes are $1779 per year (was assessed in 2008). I need to get insurance rates.
I have money to put 20% down. What other factors am I missing? What do you experienced investors thing?
Thanks!
Make sure you have accounted for all expenses. Who pays water? Heat? Snow removal? CATV? Etc. Check/verify the current leases. Many rental areas in the US are under pressure. Trust but verify. Is this new construction? If not, also account for replacing EOL items (EOL= End Of Life) like appliances, roof, HW heater, etc. Good post from commercialking. I would start with 100% seller financing and work backwards from there. Keep the 20% in reserves. Retaining cash for REI now is like a full canteen in a drought.
Interesting. Have you talked to a mortgage broker to see if they are experiencing similar restrictions?
Yes, I talked with a broker that could place my loan with either Wells Fargo or Bank of America. It seems that CitiMortgage has established this internal rule as a prophylactic to the perceived risk of default when borrowers have more than 10 mortgages.
After getting the 0 point, 30-year fixed loan rate, I could have reduced my monthly payment by $120. Rolling in the costs of the refinance would have added about $4500 to my loan balance. If I did the refinance, but still paid the same amount that I am paying now, I would retire the new 30 year loan after 266 payments.
When I looked at the amortization table for my current mortgage, I will retire my current loan after 278 payments at my current rate. Keeping my same payment with the refinance would allow me to pay off the new loan one year faster and save about $9600 in interest that I would have paid for the last year of the current loan. Adjusting for the $4500 cost of the refinance (which would have been added to the loan principal), my real savings is only around $5100. That small reward did not seem worthwhile, so I did not submit a loan application.
I did the same analysis on a non-owner occupied loan I have with an 8.5% rate. I also could not justify a refinance for that loan because the total cost of financing for the new loan would be greater than the cost of keeping my current loan.
Not only CitiMortgage but Flagstar, Chase and so many other companies. I found a few lenders that do not have that restriction but their rates are a little higher than the standard rates.
Investors are now being considered as second class citizens when trying to refinance the property? They got to blame someone.