Is This A Smart Deal?
Condidering the following rental:
FMV is about $150k
Seller is asking $169k
I will offer 140k
Oper Exp is $970/mo.
I only have $10k cash
I could get a conventional bank loan @6.75% with 20% down and approx $5000 closing costs. I have excellent credit.
I would borrow the bal of the 20% down from my home eq loan.
Is this a good deal and what do you think is the best way to get financing if not conventional bank loan.
This is my first property and I really appreciate any help.
Foggy
I would not recommending taking from the home equity either. Omit what the seller wants b/c he is not being realistic for what he is asking per the FMV. You will need to start at maybe ~135Kor less then go up. That will be a better negotiating then you may raise it a little higher. Sometime it is ok to insult the seller.
Make sure the cash flow will work for you. If the OE is 970, what will home rent for. Will you have to pay out of your pocket to keep up the property. If so this is not a great deal and you would have to decide do you want to have cash flow or pay out of pocket to keep someone else up.
Find out how much he owes on the home and base your offer on that. Maybe he priced it so high because he is expecting low ball offers. Maybe he got the house over appraised and owes 169K on it. Once you know how much he owes then you can figure out a good offer price.