Posted by Kent C on February 22, 2002 at 01:38:07:
Oh, Id ask for 6% but pay as much as 10%. As far as the balloon in 3-5 years it is based on the convergence of equity gain + market value gain vs the cost of refi + payoff of 2nd mortgage.
Buying at 80% FMV means you will have enough equity and (hopefully) market gain to be able to refi in a very short time (2-3 years perhaps) and be able to cover the cost of refi and pay off the 2nd. Something I might say here is my “deal” price is as HIGH as I would go. If you have not shown any numbers yet, bid less. They will not likely take much less than the values I mentioned because they have income from this place. There are probably not very hungry, they see value in it. Ya never know but just my opinion.
This IS a rather skinney deal.
But if this is a first deal or one of the first. It will do to get your feet wet. Even if you break even it will teach you things. With every deal, never stop asking “What could have been done better…what worse?” Never stop asking yourself this.
Why, after a few short years you may even be talking to yourself…then answering yourself…renters excuses can make ya crazy.