In my market, with housing at this rent level, I’ve found that if I pay more than 70 times a month’s rent, I have a devil of a time making a positive cash flow. My comment was based on the fact that the stated price was 81 times a month’s rent (if memory serves me). Of course, if he is going to move into one side of this duplex initially, and can get a 6% fixed rate, then maybe he can get a decent cash flow. I can’t get a fixed rate mortgage, so I keep basing my calc on about 8.5 or 9%. Right now, mortgage rates are coming down, and my ARM’s are starting to slowly slide downhill, so I’ll be smiling at these interest rates when they finally get to me.
I have a possibility to purchase a duplex for 73K. Both sides are occupied with rents at $450.00, one tenent is a long term sec 8. My question is this: Im told that a mortgage company will require me to put 10% down on this. I have yet to make an offer and get into details, but I want to find out about this requirement. Where else can I look for OPM ( other people’s money?) Any ideas or suggestions? - Thanks again.
Posted by Bruce Barilar on October 24, 2001 at 19:40:56:
Chuck, It depends on the appraised value of the home, and your credit. Commercial lenders will do 75-80% Loan to Value and allow a seller second. Some lenders will allow a small seller second, or you can take out another loan not secured by this property and put 10% down. That can come from someone’s IRA, or an unsecured loan. Ask the seller to pay closing costs for you, check out if their are security deposits and how much, verify lease income. Try and close early in the month, your rents will exceed the prorata interest on your mortgage and you will get to skip a month on your mortgage payment. Good luck, Bruce