Potential Investment - Financing Question
I have the opportunity in my area to buy a 6 family townhome for 370,000. Current rents are 4245 per month or 50,940 per year. Current owners expenses are 10,740 and taxes are 7797.00. Owner states GRM is 7.25. The current owner is out of town and I think we could lower the expenses from what is stated.
My issue is one of financing. Currently I have 6 investment properties (1 duplex and 5 single family homes) all free & clear - the 5 single families were inherited). I also own my home free & clear for the most part (have 2000 left on a home equity loan). I also have investments but would prefer not to touch them for the down.
This is a for sale by owner, and in my market will go FAST. I've been waiting all summer for an opportunity for anything - duplex, or more.
I'd like to get 2 loans on 2 of my existing rentals for the down. Is anyone familiar with doing this and if so, do you know the amounts that the bank will lend? If I'm correct I think commercial (over 4 family) will require at least 20% down so I'll need 74,000 for the down.
Any help or opinions on this as soon as possible will be appreciated. I'm waiting to get through to the bank but I don't think the bank will be as helpful. They most likely will want me to liquidate my investments for the down and not use the houses. I'm thinking its a matter of timing to get this down properly (ie we should have gotten the down financing set up a few months ago, correct?), and I may just have to liquidate the current investments to get this now and pay myself back with the equity lines on the rentals.
Sue
What about asking the seller to take back a 2nd mortgage of 10% or 20%?
Sue,
I wouldn't liquidate any of the properties I would 1st get the property tied up with an agreement of sale then if the bank wouldn’t give me money on just this property I would then ask for a blanket mortgage (blanket mortgage – includes 2 or more properties) most banks would go this route and if not look at another bank they do this kind of thing all the time. Good luck!!
Hopes this helps
Terry
Quote:
On 2003-10-02 14:08, fmmp wrote:
What about asking the seller to take back a 2nd mortgage of 10% or 20%?
CAn you explain a bit more about this financing scheme? I found a seller who is stipulating the following:
At closing we do not write checks back to lenders or purchasers. We will take a 2nd mortgage back over the asking price not exceeding 30% with qualified prospects. We will work with licensed real estate agents on an open listing basis. Add your commission to the purchase price. We will not give kickbacks, finders or procurement fees, repair reimbursements, etc. at closing. No cash out, no flipping, no assignments, no wholesaling, just straight up for the smart investor. Each house will require $500 earnest payment paid at the viewing of the property.
Would you deal with this kind of seller?
Please contact me I am an easy mortgage consultant and I may be able to help you with some creative financing. I can send you info and a application. Please see my profile and email me.