Posted by Glen SoCAl on March 23, 2002 at 15:03:55:
I’m not an experienced investor, in fact I’m a wanna-be, and I think your point is well taken, however, the opportunity that Chad (OH) was discussing sounded doable.
If you run the numbers $47,000 purchase price, $10,000 in fix up plus 2% contingency, he comes in around $58,000.
$58,000 loan at 9% comes in around $520/month -PI- (I know someone is checking my figures right now…)
I think that Chad was looking at around $775 income from both units…that is surely not a $200 positive.
Only about 65% of his income from rents would be applied to profit…maybe 70% let’s say that’s still just covers his nut.
But if he moves in to the place, he’ll be contributing to the rent…money he’d otherwise be throwing away somewhere else, add depreciation and it doesn’t sound like such a bad deal.
Chad may have not fully considered where his loan is coming from or how he’s going to fund the deal, but as Brent (IL) mentioned, with a Sub2 or maybe a carryback, Chad could do just fine.
And the main thing is that Chad is posting here looking for help, so that he doesn’t make a bad decision.
Experienced investors choose more wisely. Chad won’t be one until he is one. But in the meantime, he’s educating himself. So lets give him applause for that.
Again, your point is well taken, but Chad may not be the best person to affix to the chalk board as an example of poor effort. He didn’t do nuthin’.