My first real “deal” - Posted by TomW
Posted by TomW on December 30, 2000 at 20:35:11:
Here’s my story.
So far I’ve dabbled in REI when I could. Right now I have a rental that was my first starter home. I kept it after purchasing a bigger home 3 years ago. It has a positive cash flow and I’ve got about 20K equity in it at this point. I now have an opportunity to get another rental without incurring many transaction costs.
My mother purchased a 2-bed/2-bath condo in a small community about 3 years ago (near KC, MO). She rehabbed it using about 9K. It was a total wreck when she bought it. The homes association handled her mortgage, as it would have been hard to get financing in the shape that it was in. However, the note required her to find other financing within two years.
For health reasons she moved to a Southern state and I have been managing the condo for the last year. I rented it as a lease/purchase in March, but the single mom cannot get financing. The value of the condo is around 40K and the balloon payoff amount is 26K. I have a great renter ($400/mo) that would like to stay (the mom) so I’m going to purchase the condo from my mother so she can get some of her equity out and I’ll keep it for a rental. I have Power of Attorney (POA) and can pay cash if necessary but for tax reasons would like to get a 15yr loan for around 30K.
Shouldn’t be a problem. However, the condo is in a very tight knit community where there are virtually zero comps because the homes association has always financed them in the past. The only true “value” that I can get is based on the rent I can charge and the appraised tax value (38K).
So, here are my questions:
If I do go after a conventional mortgage, is there a well-known, national appraisal company that I should use.
Do I even need to “buy” the property? Is there some easier way to transfer ownership with incurring all of the expenses of closing, etc. since I have POA for my mother?
What is the best route for finding financing on such a small loan (32K). It is so small I would imagine most lenders wouldn?t want to bother with it.
Thanks for any help!