Posted by John Corey on May 19, 2006 at 19:06:14:
You still have to explain the math.
You said you borrow X for the first and the seller carries the balance. That does not leave room for cash back.
Step the group through the numbers.
John Corey
Need Help With This Deal!!! - Posted by barnabey
Posted by barnabey on May 18, 2006 at 20:32:09:
ok I need some Help on this deal, here are the figures im working with. I found this 6 Unit apt complex. It is in great shape and all 6 units are currently rented. I was able to chip at the price and agreed on a purchase price of 700K. I also have an private investor that is willing to put up 65% of the purchase price at 13% interest. The seller is willing to carry a second mortgage that will cover the remaining balance and closing cost at 6.2% interest for 30 years. The units bring in a gross of $56,500/annualy($4,708/monthly. After talking to my investor and crunching in the numbers, I would walk away from closing with a 125K + 1 yearof payments in escrow. The only downside it that i would have to come out of pocket for about $500 each month because after factoring in property tax and other expenses the rent wont cover everything. So it boils down to 125K and i would have to cover the diferrence each month. Is it a good deal. Any imput would be greatly apreciated. Pls help!!!
Re: Need Help With This Deal!!! - Posted by zach
Posted by zach on May 19, 2006 at 15:56:04:
Im curious to know how your coming out of the deal with cash as well?
Re: Need Help With This Deal!!! - Posted by GMann
Posted by GMann on May 19, 2006 at 13:15:03:
I don’t see the problem. Get a CD or savings acct that pays 5% and it’s a free deal AND you get the 25K+ depreciation per year. Be sure and look at vacancy and the property condition.
Down the road 1-2 yrs. you can refinance the first with better rates if you can get the seller to subordinate the 2nd. Something to think about and set up now.
Nice job!
Re: Need Help With This Deal!!! - Posted by John Corey
Posted by John Corey on May 19, 2006 at 05:22:27:
Barnabey,
Explain how you will walk away with any cash after closing.
You are paying $700K and the private investor will loan you 65% of the sale price. The seller will carry a second the balance (plus closing costs).
If a property throws off cash at close and some of that money can be used to fund a negative it might be a good deal (I have not checked your numbers). Before getting into the issues of negative cash flow funded by pulling out equity I want to understand how you expect to pull out the equity.
John Corey
Re: Need Help With This Deal!!! - Posted by barnabey
Posted by barnabey on May 19, 2006 at 16:39:04:
By having the seller carry a good chunk of the price (at a lower interest rate) and i am planning on using this cash to fund another deal i was under contract… Is that a bad idea???