Posted by Redline on November 03, 1998 at 14:36:52:
Whoa whoa - slow down!
First of all, have you sat down and examined all the numbers for these properties? Do the numbers make sense? Will these properties make you any money?
Not to mention the fact that this person doesn’t sound too motivated - he still wants you to get an 80% mortgage.
What do you plan on doing with these properties? Rehab? Flip? Keep and rent them out? Live in them? What?
You may need to sit down and examine what it is you’d like to do first before you jump at the first thing you see.
How can I buy these properties? HELP! - Posted by Karrie Rogers
Posted by Karrie Rogers on November 03, 1998 at 08:58:47:
I am actively trying to make my first investment purchase and I need some advice. The Seller is willing to group 5 rental properties into 1 mortgage for a lump sum of $400,000 (80% mortgage, 20% seller financing). The rental incomes will more than satisfy the payments but how do I “qualify” for this amount? I need to act fast because there is another party with the same idea.
Any advice would be a great help.
Re: How can I buy these properties? HELP! - Posted by John OH
Posted by John OH on November 05, 1998 at 24:35:53:
Pass on this one. Way too much money and complicated for a tenth deal, let alone a first.
New investors are always eager to make deals. They are afraid that they’re missing a great opportunity by passing one up. You will find that opportunity is all around you.
A large part of this business is developing a sense of which deals to become involved in. Find a nice single family or duplex to get your feet wet. You’ll be glad you did.
I would be extreemlly leary of this deal and not be presheured by anyone. Keep in mind that 20% of 400,000 is $80,000. This is a lot of money for the seller. Probably the interest rate he intends to charge is much higher than that of a local bank, CD or bond. I would try to get him to discount the property compared to the appraisal. If the appraisal is for 400,000 offer 15 to 20% less. This would reduce the price by 60,000 if 15% is droped. Surely this will meet the loan to value for the bank and the seller will still get 68,000 2nd owner finance. All of this is hypothetical, because I would look at the cashflows and do extensive financial analysis and ensure that the principal, interest, tax and insurance is paid along with all the opperating cost. I hope you have enough experience to do the analysis, if not get a professional to help, such as a broker, cpa, or a lawyer. I would also be a bit leary about putting all the properties under one mortgage agreeement. I would structure them seperate, because you may want to trade and or sell one or two of them and use the profit if any to buy down the loans on the others. I do deals like this but I use raw land; buy at farm cost and rezone commercially. This increases the value. Your deal requires percision financial analysis.