need help with this deal - Posted by Demi

Posted by Scott M. on March 17, 2001 at 17:45:32:

If you’re buying 2 two-family houses, one for $250,000 and a second for $175,000, I’m wondering if you get tenants for all four units, will you still have enough cash flow to cover loans that large? I suppose it depend on the area and what rents you can get but that is what I’d be looking into.

I know I’m presuming. More numbers might help fill in the gaps. It just seems to me that your first issue may be cash flow and not down payment. Forgive me if you’ve already worked this part out. I may be just jumping the gun.

Best of Luck.
Scott M.

need help with this deal - Posted by Demi

Posted by Demi on March 17, 2001 at 17:28:15:

I have accepted offers on two, two-family houses. The banks I’m working with are willing to lend 90%. The two properties appraise high enough so the 90% covers what the seller needs plus closing costs. The problem I’m having is the banks require me to show that I have the 10% down payment. On one property that 10% is $25,000. On the other it is $17,500. I don’t have cash available, nor do I have credit lines anywhere near these amounts. Any suggestions would be grealy appreciated.

Best Regards,

Re: need help with this deal - Posted by Ed Garcia

Posted by Ed Garcia on March 18, 2001 at 08:58:14:


You say bank, I hope you don’t mean Mortgage Company. Demi, the rule of thumb in bank lending, is to lend based on purchase price or appraised value which ever is LOWER. That being the case could be one of the reason the bank is requesting proof of down payment.

Demi, we don’t have any information abut you or your circumstances, for example do you already own a home? If you do, for how long? Is there any equity in it? Are you showing enough income to debt service, etc?

I have the impression that your credit is good or you wouldn’t have gone to a bank. If you already own a home, you can pledge it as additional security and cross collateralize it with your new acquisitions, giving them a second on your house.

Sorry Demi, this is the best I can do with such little information,

Ed Garcia