You are putting 10%-20% down and getting a new loan. They are charging you all the closing costs because the price is net to him. They are adding costs because of the low loan amount.
When you say you can’t afford it you are right. You also have to get over the “fear” of the tenants. You will be their landlord not necessarily their friend.
How old is that water heater, roof or furnace/AC? I think it was Joe Kaiser that put the figure of 20K you should have before you become a landlord.
Hey guys, I need some help with this one, I’m in the process of purchasing a 2 unit house for 35000, the problem is, the house brings in decent income, and the guy who owns it uses it as an income property obviously, he doesn’t really care if he sells or not, which is real bad for me. This is my first deal, one side is rented out, the one side covers all mortgage, insurance, etc., so it has some good cash flow, now all the sudden they’re throwing almost 3,000 in closing costs at me, I can’t afford that right now coupled with the down payment he wants. He wants to do the deal by the end of the month, I can’t do it quite that soon, I want to do it at the beginning of February so I don’t have to approach my tenants for rent right away, I want to establish a friendship with them first before I ask them for the money. Do you have any advice you can give me, the house needs no work, it’s ready to go, it’s a turnkey opportunity that’s why I’m doing my first one this way. Thank you for your time, I know this was long.
I’m no pro, but I got a lot of help from an owher–and from a broker too–because they want to make a sale. Did you ask him/her? Maybe you can get the owner to pay closing costs. Even if the owner says he’s not that interested, see what he might do once a deal looks good and then there is a fear of losing the deal.
Also, brokers know a lot of ways to get around closing costs. And I don’t mean getting rid of closing costs. Brokers only make money by getting a deal to close. Talk with your broker. And if your current broker won’t help talk to another broker.
Posted by JDenney on February 09, 2000 at 12:39:06:
Number one rule “buy only from motivated sellers”. Find the motivated sellers then make a deal if possible. Ask yourself this …If I put this much money into every deal , how many deals can I do this year? You need to take what little money you have and spread it on as many deals as you can or put it all in one property and then quickly flip it to get it back. Don’t take yourself out of the game to buy 1 house.
good luck, Jeff
Posted by Doug, KY on February 09, 2000 at 10:09:22:
You want to close after the first of the month. Try to have the owner place an exceptable tenant to you in the other unit before closing. Normally, you would like to place tenants that you have screened in after closing, especially if your intending on raising rents, but this will work when you need cash to close. Have the deposits for both units and the prorated rents delivered to you at closing. You see by closing after the first, this will give you just short of sixty days before the first mortgage payment. (Deposits + two months rent per unit = closing costs) Also, ask the lender (mortgage broker) if you can finance any of the closing costs. You’ll be surprized by what some will do even if it’s unattentionally wrong. One lender financed the escrow for taxes and insurance. Now, I had to correct it later but it did buy time. If it’s the money maker you believe, Figure the numbers and go for it.
I would say that being landlord is a business and being friends with your tenants is not important but getting good tenants and receiving the rents on time is. I must say buying a duplex for $35,000 with no rehab or maintenance seems a little strange; I would question why the other unit was empty, what the location is (desirable - undesirable), what the cash flow is and could be, etc. Some of the best lessons are learned by doing. In any case, get your game plan togather and decide what it is you want to do. Become more educated - find some books or course to take. Sometimes just increasing the cash flow and reselling is a better option instead of holding it. Just a thought.
This is just one answer. It’s still pretty much conventional because you are using a downpayment and instutional funding to get into the deal. Knowing all the circumstances, there probably are other ways to acquire this property for profit and/or cash flow. One thing you mentioned about the owner/investor not hurting for the monthly payment and not being motivated and one unit rented and other not-Hmmm. He, in fact, could be motivated and tired of dealing with it if he has had one or more units vacate or evictions. Just a thought again.
Posted by TRandle on February 09, 2000 at 08:07:17:
Mark,
If you would like assistance, please post more details. The more info you provide the easier it is for folks to make suggestions. Once you do that, you should get several responses. Then, you can make an offer that works for you. If the seller doesn’t accept, on to the next one. All of us who are fairly new try too hard to make a deal work just so we can get it done. When you finally meet a motivated seller, it’s just a matter of working out the details. Good luck…