Purchase Debate
Hi all, I am new to this forum and hoping to get some advice. I am looking at buying a condo that I want to rent out. It is a low season for rent and I am concerned about my ability to get tenants in there within next 60 days. I know that during high season, I can rent the place for 2700-2900 dollars. But for now, my our of poket expenses will be about 2300 per month. That is if I do 30 yr. fixed. I can get it down to 2000-2100 if i do 5 year arm. any suggestions?
Thank you
If you let us know your area someone here might be familiar with it and give you some better advice. I'm in a college town so leases are strictly 1 year long so we don't deal with no pay during the summer.
i am in Boston area. i know that units above, to the right, to the left are all rented at 2700 at least, which would bring me a pure profit of 400 a month. great. But I am scared to by in the off season, allthough I can probably pack couple of students in there and break even. I also can't make up my mind abount financing. arm vs. 30 year fixed.
thanks
Hi zhenka,
Are their lower priced properties that you could invest in? If there is a strong possibility that you are going to be stroking the rent for a month or two, it may be better to purchase a lower priced rental.
Do you have a large cash reserve to fall back on?
BAMZ
[addsig]
The good thing is that the owner will let me start looking for tenants as soon as the offer is accepted. since i want to close in 60 days, that gives me 2 months. i have cash to cover vacancy, but i do not want to use it for that purpose of course. I think i will try to rent it out at break even until August 31. In May I will put it on the market for 2700-2900.
ask for a 2-3 month vacancy concession at close.
what is vacancy concession?
Talk to your mortgage broker about loans with option payments. Some of these finance vehicles offer several different payment amounts each month typically -- minimum payment, interest only, 30yr and 15yr. During those down months you can make the minimum payments then get back on schedule once the renters are in.
We think you should rethink this seasonal property. If vacancy is always an issue and carry costs are looming. It appears to create a negative cash flow. (over 12 months with a minimum 3 month vacancy) If you are willing to accept this level of risk, OK but investors have learned negative cash flow on the flip side with a large monthly payment is hard to swallow each month/year.
Is this why the seller is motivated?
Eric & Rosa
[addsig]