Posted by RR Smith on February 03, 2000 at 19:17:29:
If you can owner occ. and if you can make the payments (negative cash flow is common in these cases)or JUST IF you can make the payments …buy the place WELL with an eye towards streamline refin. after a short period to get your mort. rate down to “normal” levels and then with appreciation and lower payments you will have Positive Cash Flow. In fact as a ploy this strat. has worked well for me as the REI market slips away from investors, but remember it is a last resort and you SHOULD BE ABLE to find better deals, much better.
I have an out of town owner who has a 3/2/1 SFH for sale.
It has a pre1988 FHA Assumbale at 12% with payments of 410.00per month including T&I. The balance on the first is 23,000 and she wants 10k cash. I am very certain I can get her to take less cash. Comps are 38k-42k. My questions are:
Should I offer her a total cash price and put a new loan?
Should I assume the high 12% first? Does anyone know if
FHA will work with me to lower the 12%? I think I heard form the Carlton Sheets program that they would.
I think she might even take a second, with a little cash!
My problem is I can’t decide if I should buy to owner fianace and then sell the note or just rent.
Re: Refinancing may not be the best alternative - Posted by richk (OR)
Posted by richk (OR) on February 04, 2000 at 12:36:37:
Just a reminder that on a 12+ year old loan, each payment will increase your equity a lot faster than it will on a brand new one, regardless (generally) of the relative interest rates. The seller has already made all those early years of high interest/low pricipal payments that you can skip! If you refinance, you will be making mostly interest payments…