Zero down purchase - Posted by Pat

Posted by Scott Moore on June 19, 1999 at 18:12:38:

I HIGHLY suggest that you NOT buy that house because you have done NO research. You can not “guess” what the taxes and insurance are. This is what YOU need to do…

  1. Call the local office at city hall or where ever tax records are located and get the taxes charged to that house.

  2. Call an insurance company and get a quote from them. This is what you need to know: Home age, roof age, type of updates like electric and furnaces and such, what type of heating it it, how many amps is the fuse box?

  3. Look in the paper and find out what the local rents are in that area for that type of house.

Then you should be able to put together enough numbers to see if it is worth the deal…

Zero down purchase - Posted by Pat

Posted by Pat on June 19, 1999 at 14:14:24:

Seller will finance zero down at 10% interest on 90,000.00.
Property said to rent for $1200.00 a month. The asking price is 85,000. with down payment.

The property is not in the best of areas- my concern is to take it and run, but what if I can’t rent it for the said amount.

How can I structure a note that I feel good with?

Re: Zero down purchase - Posted by Brad

Posted by Brad on June 19, 1999 at 20:25:09:

I was just thinking, and I am no guru, but if this house is anywhere near below market, even by a coupl of thousand (it has repairs that need to be done, right?) see if you could negotiate a little farther down, and do a wwrap around mortgage, owner financing the darnt hing yourself for 6-7k above what your purchase price is. You get upfront cash, plus a small spread at the end of the month, and who cares what taxes are? They are not yours to worry after your buyer pays you for them! Good luck, and this is just a suggestion, hope it might help…

Re: Zero down purchase - Posted by Redline

Posted by Redline on June 19, 1999 at 20:20:37:

What’s the place worth? What’s the FMV deduced from the comps you’ve ran?


Re: Zero down purchase - Posted by B.L.Renfrow

Posted by B.L.Renfrow on June 19, 1999 at 15:54:55:

There isn’t enough information in your post to provide an intelligent answer. Just because a seller is offering 100% financing does not make it a good deal. What is the property worth? The only reliable way to know is to find out what similar properties in the neighborhood have recently sold for. Also, you note that the property “is said to” rent for $1200 per month. Says who? Is that what rents for similar properties are running?

If you buy at 90K at 10% for 30 years, you P/I will be about $783. How much will taxes and insurance add? It wouldn’t take much to get up to your $1200 figure, assuming that’s even realistic.

Also, what do you intend to do with the property? How you structure your offer depends upon whether you intend to live in it, lease/option, flip, rent or retail it. And, are any repairs needed?

Having said all that, it’s certainly true that a property with attractive terms is generally worth more than a similar property for which the seller will accept only cash. What is the seller’s reason for selling?

If you have any or all of this information available, post it here and I’m sure you’ll get more responses.

Brian (NY)

Re: Zero down purchase - Posted by Pat

Posted by Pat on June 19, 1999 at 17:47:06:

The property will be rental-it was purchase by the seller at an auction. He said prior owner mentioned what he rented it for. Property was sold for back taxes. The property does need some repairs, siding, painting etc. Taxes may run $250. a year insurance not sure but around $300. a year.

I personally would not live in this house,but they do rent in this area.

The Numbers Suggest… - Posted by Bill K. (AZ)

Posted by Bill K. (AZ) on June 19, 1999 at 18:46:22:


In addition to the fine advice given by Scott and B.L. Renfrow, let’s look at the numbers from a basic formula for rental properties. All figures are monthly.

Gross Income: $1,200
Minus Expenses: $480 (40% for taxes, insurance, maintenance, repairs, vacancies)
Minus Debt Service: $790 ($90K @ 10% for 360 months)
NEGATIVE Cash Flow: $70

You really need to research the numbers, but based on what you’ve told us, this property looks like a poor investment at the moment.

I hope this helps.

Bill K. (AZ)