Posted by LK on April 27, 2007 at 19:01:02:
It doesn’t really sound like a deal at (or near) that price based on the gross rent. You aren’t doing yourself any favors if you get it with zero down and you owe too much (too little cash flow and not enough equity). The only way you may justify a higher purchase price would be to buy with good terms. But the numbers would still have to work based on your exit strategy. Most of the investors on this forum would give the advice that you make your money on the buy. Meaning that you buy well below FMV or you buy with such good terms that the odds are really in your favor not to loose. There are some investors that will suggest it?s alright to buy at FMV and wait for appreciation. That may be fine, if your 99.999 % sure of the appreciation. I’m going to stick with the former because my crystal ball is broken.
Some additional information may help others answer your question. Such as:
- The FMV (for retail sale)?
- Your maximum purchase price?
- Your exit strategy…Are you buying for appreciation, or cash flow, or both. Do plan to hold for 1 yr, 10yrs, or 20 yrs?