Posted by Atlanta_bob on June 05, 2005 at 19:54:35:
If you buy property using conventional means (= mortgage loans), then MAYBE you can buy both properties. Just run the numbers to see. Let’s assume you have decent credit and you can obtain 95% financing on each property. Assume you pay 2.5% in closing costs and 2% in pre-paid escrow account. Total = 9.5% expense. For your primary residence, that 9.5% (of $180K) = $17,100. For your 2nd home, that 9.5% (of $250K) = $23.75K. Total cost to purchase = $41K. Available funds = $35K. Best ask your mortgage broker how much everything will cost to buy those properties, since you are fairly close to your available funds.
A main assumption in the above example is the condition of each property when you buy it - - good?, bad? or ugly? If each property is good, then you have minimal costs to fix-up. If ugly, then your funds are very, very thin and you might, perhaps, just have enough money for one house.
You can often get 100% financing on houses, especially your primary residence, with good credit. If possible, then you won’t have to pay the 5% downpayment on $180K (= $9K) and your total “cost to purchase” both properties approaches $32K. Again, ask your mortgage broker if they have loan programs to meet your needs, including their closing costs for each loan. However, best to make sure that rental property will cash flow each month with 95% financing, unless you have money to burn each month!
Hope this helps.