Just Not Sure If I Should Keep Going
Im about to purchase a 140k ,3/2 sfh with a 80/20 loan.
The first is at 7.5% , the 2nd at 11.3%.The home is to be used for sect 8 housing. Im just concerned at this rate, can I make this work. The prices of homes in this part of Arizona is just moving upward. My question is, even at this rate, as long as someone else is paying almost all of the mortgage, is it worth it? Have to decide soon, thanks.
If you only had -$100 negative cash flow per month and the market was moving up at 15% per year then maybe.
I would look for a better deal however or a partner to get better financing so that it cash flows..
[addsig]
You should run all the numbers (rent, mortgages, utilities, taxes, vacancy, maintenance, etc) and figure out exactly how much cash will be flowing out each month. Negative cash flow can become very painful, so think a lot before taking that on.
Ideally, you would compare this house against other similar rental properties that have sold recently. Look at the CAP rates to make sure you are not overpaying. You can also look at comparable home sales in the area, but it often homeowners are willing to pay more for their houses than investors, due to emotion.
Hope that helps somewhat.