Posted by Felix on August 03, 2003 at 07:11:56:
I would suggest getting a comp of rental prices, it’s possible the current landlords are not getting fair market value, this often happens when a multi-family home is inherited or owned outright.
Otherwise I would suggest finding another property.
Looking for a creative way to finance - Posted by Diane Schmitz
Posted by Diane Schmitz on August 02, 2003 at 22:43:30:
I’m a beginning real estate invester in California. Today I found a duplex located in San Jose that is FSBO. List price $475,000. Each unit rents for $1243. Owner pays $70/month for garbage & $60/month for gardener. Tenants pay the rest of utilities. The sellers inherited this property and own it out right. They are willing to carry 10% but I think that might be negotiable since they stated they are very motivated. All heirs live out of the area. There is ~$10K
in Section 1 termite repairs. Comps of the area show sells of $490k, $495K, & $532K.
My question: how can I finance this without depleting my cash and still not have a negative each month?
Re: Looking for a creative way to finance - Posted by CW
Posted by CW on August 05, 2003 at 20:19:20:
If you have good credit you can get an interest-only loan that is fixed for three years or so at maybe 7% or so, but you’d still need to raise the rents to make cash flow. The previous owner was probably willing to rent cheaply in order to keep his tenants. He obviously didn’t have cash flow concerns…good luck!
Re: Looking for a creative way to finance - Posted by dknj23
Posted by dknj23 on August 02, 2003 at 23:08:27:
Hi Diane,
If your intention is to buy this property for rental income i would suggest that you keep on looking.
You stated that each unit would rent for $1,243 giving you $2,486 monthly. Now if you were to get a mortgage at this purchase price at 6% 100 ltv your monthly mortgage payment alone would be $2,850.
You would only break even on the mortgage payment if you got this house for $400,000.
In this case you can’t make lemonade from lemons.
My suggestion is to keep on looking, this deal will not work.