Help, Newbie In Need
I need help, determining if the deal I am thinking about doing is a good sound deal or if anyone has any other thoughts or ideas that could help me. DETAILS; 2 properties in a good Kansas City area, both lots are connected, both properties are leased until Dec 1, 2004 at $550,$600 respectively, FMV $130,000, asking price $130,000, I know we shouldn't ever buy at FMV but with the propert y in a good location and the fact that both are currently leased out. Is this something that has potential. Any feedback would be appreciated. Thanks in advance.
Mr. Hammer
At about 5.5% interest you are looking at a payment of about 950 dollars a month on the mortgage. Your 2 rental incomes are around 1150. When you get done with property taxes and Insurance you aren't looking at much on your end. If the furnace goes out in the first 2 years you have the property you will have a negative cash flow from the house and that is assuming you save all money that you have left over. My advice is to look for another deal but I am in no way an expert.
Jim
Thanks, Jim they are both leased out one residential and the other commercial. Both tenants are responsible for any repairs and such. Which doesn't always mean anything. But when the lease is up in Dec I will raise the rents{they are a little low} So I guess I wouldn't have any positive cash flow until then, besides the obvious equity build up. I'm hoping to get the property for less than the $130000 but he is pretty firm on the price.{existing mortgage} . Thanks again and keep the good posts a coming.
If they are listing it for $130k, most likely they aren't expecting to get the full $130k, maybe you can get out of there with it down 5 or 10k, that would help put a little bit more flow in your pocket. What are you looking to get out of this property? There will be little cash flow, and little appreciation. I would think just a normal duplex might be better for you. Perhaps cheaper too... I'd look around for them first.
Ruman, thanks you might be right. I think I'll toss some numbers around and see what would be a good offer and if that's not acceptable then move on. We'll see what happens.
My policy is always to make money when I buy (below market), with cash flow the second factor and appreciation being icing on the cake. I would pass on this particular deal unless I could get it for $110k or less.
I'm going to assume that the two properties are selling together for $130K? Since it's listed at that price, you should be able to get them lower. It's apparently FSBO? Remind them that they're saving comissions of 5-6%, which is over $6500 on that property. Also, if they'll require any work, that can add to your negotiations too. Hope this helps, and good luck!
jstoub, good advice. They are together, And with the current mortgages he has , I haven't been able to get him under $123K with no money down at 6% or $119K cash, am I getting close or should I just walk away