Re: Is there a Deal here - Posted by Jim_MA
Posted by Jim_MA on January 05, 1999 at 07:30:24:
Rather than simply tell you that this is not a deal, I will attempt to explain why. I currently hold 12 Condos for rentals so this is from my experience.
Given the info you provided here are the problems:
- The fact that the complex is 70% rentals is bad. This will not meet Fannie Freddie Guidelines therefore any financing will be non-conforming. This will require 30% down and probalbly 9.5% on the rate. That being the case your payment would be 235/month. 30 yrs
- The condo fee is extremely high but there could be a temporary assessment in place or there could be underlying problems not being disclosed. Have you thoroughly checked the associations CC&R and financials?
- the taxes seem in line with my units.
- Not knowing your location rents for 1 BR here are only 500-600. but i’ll assume you are right
Here’s how I see your deal:
purchase price: 39900
down payment: 12000
closing costs: 2000
your investment; 14000
rental income 8400
minimum expenses: 3600
debt service: 2820
but the following also needs to be covered:
unit maintenace: I would Budget 1200/yr
Tenant finders fee: 700/year
10% vacancy factor: 840
as you can see these items will consume that 1980 potential profit quickly. Condos three to four years ago were a good deal but current pricing and market rents are now making these deals non-starters. you need to make your money going in. unless there is a significantly lower purchase price i would not consider this a deal. Leave this one to be owner occupied if the price can not be negotiated further down. If you would like more info email me i’m more than glad to help anyone. good luck