Posted by Richard on November 18, 1998 at 21:31:40:
Make sure the seller does not add in a
‘due on sale’ clause and/or a
‘pre-payment penalty’
These have both cost me in the past.
Should I buy - Posted by Stacy
Posted by Stacy on November 17, 1998 at 08:20:56:
Yesterday I had a FSBO call me to offer a house she has for sale. Here’s the info.
Asking $43,000
2 Br/1 Ba
Nothing down
Will hold mortgage 20 years 7% interest
Pay 1/2 of closing
New roof -1989
New furnace - 1998
Has tenant @ 385.00 a month till April '98.
Tenant has been there 4 years. Couple with 2 children
Several houses rented in area. Most at $400 and up.
Haven’t run comps yet, but have looked at houses in same area for 49,900, 41,900, both needing work.
Question: WHY shouldn’t I buy this house as a rental?
Am I missing something…or is this possibly an easy buy?
Re: Should I buy - Posted by Bud Branstetter
Posted by Bud Branstetter on November 17, 1998 at 10:25:54:
On the surface owner financing and nothing down but half the closing costs looks good. The mortgage equates to a P&I of ~$333. Can you support taxes, insurance and maintenance on the difference? You can ask for 30 yr amortization with a balloon at 20 years or you can ask that the first year or two the payment be less($285). As long as the house is not too much greater than FMV I would put it under contract.
What I would do with the property-first offer to owner finance or lease/option to the occupants at a payment to cover the mortgage and some cash flow. I would prefer the owner finance because eventually the mortgage holder will discount or the new buyer can increase payments. There may not be a lot of back end profit on a L/O. I will give up ownership, maintenance, or future appreciation for the monthly security of the cash flow.
Re: Thanks and… - Posted by Stacy
Posted by Stacy on November 17, 1998 at 11:15:58:
Thanks for the idea of lowering the payment for the first year or so… I know she’ll bite.
Another question…with tenants in the house, should I have an inspection OR are papers on new furnace, recent wiring and new roof satisfactory?
Re: Thanks and… - Posted by Bud Branstetter
Posted by Bud Branstetter on November 17, 1998 at 15:17:53:
If you think you know enough of what to look for then you take your chance. Spend the hundred dollars and feel safe that a pro looked at it. My son bought a house last year. Four of us went thru it looking for items. The house inspector still found things like a 30A breaker on a 14Ga wire(a no-no).