Could somebody check this deal out for me? - Posted by Tim (CT)
Posted by Tim (CT) on January 29, 2002 at 15:55:51:
O.K here it goes
I’m looking at a 3-family multi-unit. My intent is to rehab the property and then, try and re-finance it to get my money out. I will be using a partner to purchase the property and I would be the one to finance the rehab portion of the project. Both my partner and I would be on the deed as co-owners but the mortgage would be under their name so they can get the tax benefits. I’m just looking to get into a property that will give me a good positive cash flow with little or no money (net) out of my pocket. Here are the details:
Purchase Price = 77,500
Investor D.P. 5% = 3875
Total Financed = 73625
Closing Costs (3.5%) = 2712
Total buying costs = 6587
P.I.T.I. = 861
Expenses = 250
Total = 1111
I currently have two tenents and getting 1350 total for rents so my holding costs are covered.
Rehab Costs = 13500
Total out-of-pocket 20087
Into the property for = 93712
After rehab value = 120000
Re-finance at 80% of value = 96000
Re-finance close costs (guess) = 2000
Total re-financed = 98000
Cash after close (98000-93712) 4287 (2634 would go to investor to give them a 40% return - I would keep the rest (1652))
After rehab and refinance, with all three units rented at $750/unit, it will give me a positive cash flow on this property of about 850/mo.
So, basically I would get into the property with a positive $1652 as well as getting about 850/mo positive cash flow.
#1). Is trying to re-finance at 80% of ARV feasable. My credit score is about 720 and (hopefully) I can get an investor with a decent score as well. Also, what kind of interest rate could I expect? I would be hoping for about 8.25.
#2). Is a 40% return on an investors upfront cash decent for them. I anticipate the whole deal from close of the original purchase to the re-finance to take about 3 months (rehab time).
#3). Have I missed anything or have the wrong assumption on anything.
I, obviously, haven’t found a partner yet, but I want to go to them with correct numbers. I need to go through my list of possible people (friends and relatives)
Thanks in advance for any comments. Also, if you need any more information, let me know.