Posted by Jeff H. CT on July 25, 2003 at 21:46:15:
Jeff,
Buy it for $125K and have him hold a note (whether it is a friendly note or a real lien) for $20K. That is 16% down, more than enough for any bank loan. Your loan from the bank will be $105K @ 5.75% 30yrs= $612.75/mth.
Have a seller give you a concession at closing of 4% ($5K). This money will pay your closing costs and then some.
After you buy the house, open a HELOC(home equity line of credit) for $20K (140K-120K). That is your down payment for your next deal. Good Luck
Jeff H.
A good friend of mine wants to sell their townhouse. The current mortg is at 6.5% and the payments are $1000/mo with 28 yrs left on the mortgage. I think he has about $100k left on the mortgage and the property is appraised at $140k. He would be open to a Contract for Deed or other creative solution. Another issue is that he can rent it out, but if I buy it, the bylaws state that new owners can’t rent it out (I’m assuming they eventually want 100% owner occupants, but current owners are grandfathered in).
From a cash flow standpoint it doesn’t seem to make sense. I think I can only get 900-1000/month rent. The appreciation has been good for him at 8-9% per year, but the rental market is weak right now with about a 10% vacancy rate.
Any creative ideas for me out there? Or should I tell my friend to go ahead and put it on the market to sell to owner occupants? Thank you.