I’m thinking about doing a 107% mortgage to purchase an investment condo. The reason for this mortgage is I have little upfront money and want to still be able to purchase investment property. The condo is located in an up and coming neighborhood and I could purchase for 90000 with it being rent out at 950 a month. BTW it’s a 2 bed condo. Has anyone done this type of mortgage? Positives? Negatives? good for investing?
Have you also considered the HOA monthly dues into your monthly expenses? What about additional assesments from the HOA? It can be quite a surprise to suddenly get assessed for $40,000 for you share of a new roof and blacktop for the entire parking lot!
It has happened to friends of mine. One couple I know found themselves facing a $60,000 assement for a new roof and all new composit board siding on the complex. Yes, they bought the condo for $137,000 some 13 years ago, the condo is in a resort and is now comping at $700,000. (Another unit just like theirs just sold for $700K…to a cash buyer!) But still they suddenly had to come up with $60K last year.
Does the HOA where you want to buy have a 10 year and a 20 year plan so they know how much money they will need over that time frame? If so, they can build future costs into the monthy HOA dues and help prevent these huge assesments. Otherwise, with a no-equity (even a negative equity) loan you could find yourself in a real financial hole.