Posted by Tim in AR on April 20, 2006 at 15:46:47:
Rick, I hope you’re right - that means I’d get to live there for $1,100 a year. Is 12% vacancy rate sort of a rule of thumb in a general sense? I’ve never owned rental property before to speak of. This town has a chronic shortage of residential rentals. I’m feeling better about this again.
A different tack - Posted by Tim in AR
Posted by Tim in AR on April 19, 2006 at 16:04:48:
I’m obsessed with the notion of buying this house with a detached garage/apartment building. Once I get it, the apartments will nearly pay the note. I need tips. Here’s my circumstances:
The apartments in the garage can be called a “guest house” so it won’t be a commercial property. How can I get 100% financing on this property without paying 14% interest?
Live in the Apt. - Posted by Dazed and Confused
Posted by Dazed and Confused on April 20, 2006 at 15:33:59:
How much more could you get in rent if you rented out the main house?
Live in the apartment for a while until you build up equity and savings and then you can move into the main house.
Reality Check Time - Posted by Jimmy
Posted by Jimmy on April 20, 2006 at 07:17:31:
Never invest emotional energy into a real estate deal. It clouds your judgment.
You have no cash. You have no ability to absorb a period of vacancy in the apartment unit (and you absolutely, positively will have periods of vacancy). What are you going to do when you have a sewer line break, or a flood from a washing machine, or any of 1000 other things that can happen and require MONEY to fix.
You need to start building a cash reserve. When you have 5-6 months owrth of mortgage payments socked away, you will breathe a lot easier. and your credit profile will be a lot more attractive to home lenders.
Don’t put yourself in a position where you could be upside down almost immediately.
Re: A different tack - Posted by Larry K - AL
Posted by Larry K - AL on April 19, 2006 at 16:11:56:
What is the purchase price ,FMV, and net rental income?
Re: Live in the Apt. - Posted by Tim in AR
Posted by Tim in AR on April 20, 2006 at 15:42:57:
Yeah, I’ve considered that, but my three daughters live with me a few days a month too so I need the room. This board is great - lots of food for thought. Some of it is a bit tough to swallow…
Re: Reality Check Time - Posted by Tim in AR
Posted by Tim in AR on April 20, 2006 at 09:49:08:
Jimmy, fellas like you would have advised Bill Gates not to buy that dumb little operating system.
I plan to live in the main house, maybe I didn’t make that clear. I have equity in another property which I’ll take out as operating capitol, thanks for your concern. Now - any ideas on how to buy this thing for 0 down? Thank you so much.
Re: A different tack - Posted by Tim in AR
Posted by Tim in AR on April 19, 2006 at 16:20:19:
List 80K, I’ll buy it for 72K or not at all. Appraised for 80K. Apartments will generate 600/mo combined. I’ll use my mortgage payment to take my kids skiing in Argentina next summer.
Re: Live in the Apt. - Posted by Dazed and Confused
Posted by Dazed and Confused on April 20, 2006 at 15:52:59:
I haven’t read all the replies so someone may have already mentioned this but have you thought about 80/20 loans?
Also, you might see if the seller would finance.
Good luck.
Dazed
Re: lousy attitude - Posted by Phil Pelletier
Posted by Phil Pelletier on April 25, 2006 at 01:46:23:
Hey, Tim,
Jimmy laid out all the possible ways this deal could go sideways. I have no argument with any of them because they all happen at some point. You just put on your Elton John Special Edition Rose Colored Glasses and completely disrespected his effort to warn you about reality. He is trying to save you from yourself. You admitted you have never owned rental property, so if you are looking for a group of laydown schmucks to rubber stamp your bad investment ideas, look somewhere else. These people know how to buy the right homes with the right financing and make money while doing it. You want to snub that, you do so at your own peril (and that of your three daughters who depend on you to make good decisions with THEIR MONEY each month). I think I’m going to bed. All this ranting has really tired me out.
Phil
Re: Reality Check Time - Posted by John Corey
Posted by John Corey on April 20, 2006 at 11:55:59:
Tim,
Very bad example. Gates already had sold the OS to IBM before he purchased. Classic creative finance sort of deal.
He purchased full rights and sold a partial interest to IBM.
John Corey
Re: Reality Check Time - Posted by John Corey
Posted by John Corey on April 20, 2006 at 11:55:30:
Tim,
Very bad example. Gates already has sold the OS to IBM before he purchased. Classic creative finance sort of deal.
He purchased full rights and sold a partial interest to IBM.
John Corey
Re: A different tack - Posted by Larry K-AL
Posted by Larry K-AL on April 19, 2006 at 16:49:52:
That not a very good LTV from a banks point of view. Im not as experienced as most on this forum so please get a second opinion, but you are squeezing it with that loan amount and $600/month gross rent. Doesnt sound like a good deal. I would have a hard time convincing a bank to loan 100% with those conditions.
Re: A different tack - Posted by Tim in AR
Posted by Tim in AR on April 20, 2006 at 09:54:22:
90% is not a very good LTV, granted. (But I do plan to live in the main house.) Thanks for the feedback; I haven’t made another offer since the first lowball was unceremoniously rejected and may not make another one with all this negative feedback. That’s why I’m here…
Re: A different tack - Posted by Rick in CO
Posted by Rick in CO on April 20, 2006 at 14:11:07:
Assume you get 100% financing on 72k at 8%. Estimating taxes and insurance at about $40.00/mo. each, low monthly maintenance of $20.00/mo., and a 12% vacancy rate with a $600.00/mo. income, your yearly cash flow will be around -$1100.00.