New and need Suggestions - Posted by Brant

Posted by Tim Conde on October 31, 2001 at 14:22:39:

Rental “comps” are easy to get. Just go through your local paper and make calls. I get a temp worker once a month and they come in and make calls for rentals for a few days in some of the zip codes I own property in. In a few days, I have a pretty good idea of what rates are so I can raise rents (or not), and be able to respond to changes in market conditions in different parts of the country. It’s money well spent for me.


New and need Suggestions - Posted by Brant

Posted by Brant on October 29, 2001 at 16:52:05:

Hi all:

Can someone help me with suggestions on how/if I should approach this motivates seller?

3 Br 1 Ba Single Family home that will command at least $1500/mo rent! It’s in great shape with the potential of finishing the basement.

Asking 139,900. Market value is about 130,000. The seller has only lived there for 9 months and he bought the home with no money down, therefore he has very low equity. He will be relocating before the end of the year.

He seems very flexible. Someone tell me how to purchase this CASH COW (or it seems to be) with as little cash as possible!! Thanks in advance.

Re: New and need Suggestions - Posted by Nathan

Posted by Nathan on November 03, 2001 at 19:11:39:

First thing there are many things to take into consideration in this business in order to make a profit. One needs to know is what is the PITI(Principle, Interest, Taxes, Insurance) cost? Once you know that, you will need to know what is the average rent for that size house in your area. Do Not go on what you feel, research and be sure of the Rent Factor in your area. Rent Factors change in different areas of the same city. Many want-to-bes have drowned for not knowing the facts. Your Rent will need to be $150/mo.(minimum if not $200/mo.) NET(after PITI) over what you are paying(its called Positive Cah Flow), and the BIG QUESTION is can you get that much. If not GUESS who gets to pay it? That’s right YOU!!!

Another thing I would not rent it out, because then YOU are RESPONSIBLE for the repairs, this can eat you up. Lease/purchase it to a tenant/buyer and write into your contract that Tenant/Buyer is responsible for all repairs.

JohnBoy is correct about you need to know if the current loan is 30-yr. fixed, and is there a balloon in the loan to blow up in your face? Is the loan CURRENT? Or, BEHIND?

Next what kind of Deposit are you planning to get? Fact= get 5% of the retail price, and make it NON_REFUNDABLE.
This way you are creating a front end profit.

Many of us out here have taken Real Estate Investing courses, and they help provide all this information you need to be considering, and the forms you will need to transact this deal. I have found in my life time that it is easier to read and succeed, than to stubble out there and go bankrupt. There is a lot to this business, and it would be to your advantage to learn more before you dive in with no knowledge.

Re: New and need Suggestions - Posted by JohnBoy

Posted by JohnBoy on October 29, 2001 at 21:36:17:

He’s asking $139,900 for a house that is worth $130,000??? He has NO equity at all, much-less very little equity!

The way to buy this home is to offer to just take over his payments! If he’s MOTIVATED he’ll gladly except!

What are his payments on the property? What is the interest rate on his loan? What was the amount borrowed? What are the terms of his loan? 30 year fixed? Adj rate? Is there a balloon payment due? ???

What are the property taxes?

Before you can determine whether this is a cash cow or not you need to know this information.

If I were going to get a new loan in MY name then this wouldn’t even be close to being a deal! If the property is worth $130k and if it’s in EXCELLENT condition, needing nothing done to it, then the MOST I would even consider paying for this would be $104k if I were putting a new loan on it in my name. Anything above that would have to be on my terms or no deal!

$1500 rent on a $130k property sounds high. How do you KNOW it would rent for $1500???

How do you KNOW it would rent for $1500??? - Posted by Stepho

Posted by Stepho on October 30, 2001 at 22:16:49:

Johnboy is right, I personally would jump all over this deal myself if I KNEW I could rent a 130k house for 1.5k a month… where did you get that figure?