If you don’t qualify for financing, you will get your earnest money back. If you are turned down on financing, the owners will want to get the property back on the market right away, you probably won’t wait till Feb. 1
What are the rents on the three units? Are they worth more than what is being charged right now? 30 year mortgages are not pretty, I agree, but there may be an opportunity to increase your cash flow. Are there garages that you can charge addl. rent for? Is there extra storage in the basement or on the property that you can charge for? People pay a lot of money to rent storage space… just some ideas.
4 plex contract questions - Posted by BatPro (Adam)
Posted by BatPro (Adam) on January 02, 1999 at 21:19:38:
I have been in the process of negotigating on a 4 plex. We finally got the price set at $140,500. FMV is 153,000-155,000. With seller giving me $1000 back at closing for closing costs.
I want to live in 1 unit and rent the other 3.
I am starting to chicken out of this deal, becuase I calcuated how much is left on a 10% interest 30 year mortage after 5 years and wow, it wasn’t much paid.
I wasn’t aware that I had to come up with 20% down on a 4 plex purchase. That is out of my down payment range. I can afford 5% down and no more.
Does anyone know of any lenders that have 95-100% financing for owner occupied 4 plex?
Or, in my offer (closing set for Feb. 1) I set financing at 7% 30 year, and 5% down.
QUESTION: So now if I can not find a lender to meet these figures CAN I CANCEL OUT OF THE CONTRACT AT ANYTIME BEFORE THE CLOSING DATE AND GET MY $500 down payment back? OR do I have to wait until closing date?
Thanks guys for the ideas. The rents could go up possilby another 25-50 bucks a month and there garages right now but they included as well as all utilities . Therefore I need to get a little more rent out of the tenants.
I’ll check into the FHA loan and see if I qualify.
Posted by SCook85 on January 02, 1999 at 21:33:37:
Adam,
The property quailfies for an FHA mortgage. Because the property is falls in the 1-4 unit category it is considered residential and with you moving into it yourself you can get owner occupied rates of 6.5-7% currently. The only question is can you personally qualify for an FHA mortgage. If you can you should have no problems.
I don’t know your area, but my experience has been good with raising rents. Look at your local newspaper and check availability. I know in Galesburg, Il some of the few apartments available were govt subsidised and folks who worked on the rail road made too much money to get let in ! I had NEVER heard of that before… make too much money…anyway, it left me with a great opportunity to charge more rent. When I bought the 4 plex in 1992 previous owner was charging 150,175 and the other two were vacant. I immediately started renting for 450/ unit. the old Tenants moved out, I laid new carpet and painted, added new counter tops and new shower stalls. When I sold the building last spring, I was getting 575/ unit ! I have realized that you only get what you ask for. It’s easier to drop your rent than raise it.
