Posted by Brian on May 25, 2005 at 15:33:16:
Hi Chris,
If cash flow is your goal I would suggest looking elsewhere. I have found that multi family units cash flow generally much better than SFH’s. For example: I sold a SFH in 18 months ago and put 50% of the equity in a 4 unit in Scottsdale. Cost was $300,000 with a monthly income of $2600. Even with current appreciation that property could be had for $375,000. Why pay $525,000 for a property that produces only $3000/mo.
Help! 1st deal, is it a good one?? - Posted by Chris
Posted by Chris on May 25, 2005 at 13:40:24:
Hello! Here is my situation:
Nice 4/2.5 sfr in Scottsdale, AZ, hot market!
Seller wants 535k, comps out to about 6k.
There are tenants in place paying 3k monthly, and their lease states they make all repairs.
needs 25k down.
Property will cashflow, any suggestions?
Re: Help! 1st deal, is it a good one?? - Posted by Brent_IL
Posted by Brent_IL on May 25, 2005 at 19:47:09:
If it’s a hot market, implying monthly appreciation, why is he selling at 90% of FMV? I’m not suggesting that he knows something that you don’t, but I always look for the reasons that sellers act in the way that they do. Why is he leaving money on the table?
If the market is flat or cooling, IMO, $25,000 is a lot to put down on spec.
Paying PMI on the loan?
Re: Help! 1st deal, is it a good one?? - Posted by Rich[FL]
Posted by Rich[FL] on May 25, 2005 at 14:16:23:
Quick observation. You say it will cashflow; Let’s assume you can put some cash down and get a $500k mortgage, 30yr, 6.5%, Non-owner occupied (NOO); payments will run about $3160; add in taxes and insurance and you’ll have about $3500. If income is $3000/mo, I’m missing something about the positive cash flow - it looks negative to me.
What’s the sellers payments? What’s the underlying mortgage terms? Can you pay her the $25k down and assume the mortgage or do a subject-to (assuming the payments are less than $3k?)
Many questions, not enough information available. Good luck!
Rich