Feedback on Deal - Posted by Gary

Posted by Jim Locker on January 18, 2001 at 09:46:50:

Now THAT is good news!

Feedback on Deal - Posted by Gary

Posted by Gary on January 18, 2001 at 07:13:50:

I would like some feedback on this deal. Retiring couple own a one bedroom condo that they have rented out for $925 (market rent in my area). It is now vacant. They have 18 years left on an adjustable mortgage with a balance of about $70k. I own four other condos in the area with a cash flow of $1,000 so I have a good handle on values and rents. I value this condo at $77k. I have routinely been able to get 90%LTV investor loans on condos as long as I pay the PMI. What if I offer full value, get my 90%LTV first mtg and ask owner to hold second for $7k at 9%, 30yr. amortization, balloon in 5yr? I would secure the second with another one of my properties where I have plenty of equity. If I do that, I figure my out of pocket expenses, including closing costs will be around $3500 and my cash flow will be around $75 a month. I already asked about a L/O and they are not interested. Is this deal worth it or is there another way to structure? I figure $75 a month on $3500 is about 25% return on my $3500 investment. I am not worried about the balloon as I will have plenty of cash flow coming in over 5 years to take care of it or I could refi this or any other property I own…Any feedback would be appreciated.

Post this question in the financing forum - Posted by Paul_MA

Posted by Paul_MA on January 18, 2001 at 09:24:54:


Post this question in the financing forum. You sound like the perfect candidate for his finacing seminar. Jim Rayner started the same way.

Re: Feedback on Deal - Posted by Jim Locker

Posted by Jim Locker on January 18, 2001 at 08:06:47:

shrug. If the deal looks fair to you, and you know the area, and it cashflows to your satisfaction, then why not?

Me, I don’t do condos. But that’s just me.

Now, you indicate that you own 4 other condos in the area. Presumably you live in one of them? So you have a total of 4 mortgages?

If so, I have a surprise for you that you are not going to like. If you have more than 4 mortgages, you do not qualify for any of the gov’t subsidized mortgage programs (FNMA). This means you have to get a non qualifying mortgage.

It is unlikely that you will find a non qualifying mortgage that does a 90% LTV.

Good luck.

RE:Non Qualifying Loans - Posted by Gary

Posted by Gary on January 18, 2001 at 10:09:25:

Thanks for your feedback. Regarding condos, I think you need to know the demographics of your region. My region has many young, single professionals and demands for rents are high. I also like the reduced headaches of maintenance of roofs, driveways, lawns,exterior painting, etc. Regarding more than 4 mortgages and nonqualifying loans, I have seven mortgages and was just approved for another purchase at 90%LTV. I do tend to pay about 1.5% higher than going rates, and that may be the explanation. Thanks for your insights.

Jim That Rule No Longer Applies - Posted by phil fernandez

Posted by phil fernandez on January 18, 2001 at 09:30:04:

I just heard that from a banker the other day. That’s great news for us investors. We used to be penalized for being successful.

Unlimited mortgages for investments - Posted by CurtNY

Posted by CurtNY on January 18, 2001 at 08:33:56:

Actually FNMA did away with that rule about 3 months ago. You can now have unlimited investment properties and mortgages (you must still qualify of course).