Need Help with purchase of 2 Duplexes - Posted by CJinNJ

Posted by SRE on March 23, 2000 at 15:32:15:

My first thought is the buy down of the mortgage. That money is so cheap that I would borrow as much as possible. I don’t know if a bank will give you a wrap on an owner occupied and on an investment property unless they are on the same parcel of land.

Need Help with purchase of 2 Duplexes - Posted by CJinNJ

Posted by CJinNJ on March 23, 2000 at 13:19:32:

Hello all-

I have some questions regarding a purchase that I would like to make in the next month, but need you folks to pick it apart, or give alternative solutions/suggestions.

Here is the situation:

Wife and I are moving from a single family home just outside of Philadelphia. We bought the home 5 years ago for $180,000, carry a $90,000 mortgage w/ $90,000+ equity. We are being offered relocation to NJ w/ the company offering to cover up to $50,000 in losses so we will get the $180,000 AT LEAST. We are taking the company purchase option and passing up the 4% premium for selling ourselves.

With the cost of living increase in NJ and the area we are moving, we will not be able to afford to build the home that we would like now so I have investigated the option of taking a blanket mortgage and purchasing 2 duplexes while living in one side of one home. We plan on having the rentals pay for the taxes and mortgage, plus have much leftover to save for a 5 year window to build our own home.

Here are the numbers:

Home #1:
2 units renting for $650/each
numbers look good, even with $3000/yr taxes

Home #2
2 units
$950 (forthe 4 bedroom unit) and WE live in the other floor.

total blanket would be $227,000 w/ $90,000 down. Left with a $137,000 total mortgage.

One benefit is that the company we are moving with has given us the option of a mortgage buydown over 4 years…example:

8% (30 fixed Negotiated with mort. co)

Year 1 4% (8-4% buydown)
Year 2 5% (8-3% buydown)
Year 3 6% (8-2% buydown)
Year 4 7% (8-1% buydown
Year 5-30 negotiated rate of 8%

I really think this is a good option for us to make. I’ve managed properties in the past (mother was a Realtor for 15 years) and I know the ‘right’ way to obtain good renters. I just want to know what you good folks think of this possible road to travel.

Thanks in advance


ps-Property 1 taxes are $3000/yr, prop #2 are $4000