Re: Can you all help me make a no-money-down offer 20U? - Posted by J.P. Vaughan
Posted by J.P. Vaughan on June 07, 1999 at 09:15:03:
Here are a few comments. First, stop looking for “properties.” Instesd, spend your time finding MOTIVATED sellers. Go to our “How-To Articles” page and read “Why I Quit Looking for Properties” by Joe Kaiser.
Next, you state the NOI is $66K per year. We have no idea what you are basing that on. It should be all income minus all expenses, AND expenses should be around 45%. If expenses are stated as lower, you may be in for a big surprise.
Next, if we accept $66K as the NOI, that equals $5500 per month. The current debt service on the first mortgage is $3750 per month. That leaves $1750 per month that the current owners are receiving.
You state the seller’s equity as $230,000. That means the seller is looking for someone who will pay two-hundred and thirty-thousand dollars for the right to receive $1750 per month, along with all the headaches and hassles that accompany this kind of property.
Does this really sound like a deal to you?
It’s not even close. Even if the seller carried ALL of the $230K as a 7% second, your payments would be $1530 per month. Add that to the rest and you are looking at $200 per month… ASSUMING you never need to incur any other expenses. Beleive me, that will be a zero possibility.
You keep saying you want “creative” ideas. If it’s not a deal, it’s not a deal. Unless the seller will come off this price substantially, this isn’t a good deal.
If you want to stay in this business, you must ALWAYS make your profit going IN to the deal. You must ALWAYS make your profit going IN to the deal.
You can make profit in three ways:
(1) Cash at closing
(2) Positive Cash Flow
Unless I am missing something, I don’t see any of these here.