Posted by Austin on September 09, 2011 at 09:14:47:
I’m new at this.
I’m dealing with a short sale right now
Even if the seller and bank accepts the offer, I still have a
problem. I don’t have money for the closing costs. Even if I
bumped up my offer, the bank will still refuse to pay for the
buyer’s closing cost. The seller also doesn’t want to pay
anything.
Any help would be much appreciated.
Re: Can’t afford closing cost - Posted by Ed Garcia
Posted by Ed Garcia on September 09, 2011 at 11:05:25:
Austin,
The easiest way for you to solve your problem is to go to your local Credit Union and if you?re already not a member then join it. After doing so, you shouldn?t have any problem getting a signature or personal loan for about $5000 to $10,000.
If you have a problem with that then call me at 909-944-0199 and I may have other ways for you to work your deal.
Ed Garcia
Re: Can’t afford closing cost - Posted by Austin
Posted by Austin on September 09, 2011 at 15:08:03:
I bank with Navy Federal and I already applied for a signature loan, but got denied. I think it’s because I have bad credit (mid 500s).
The property is a 4 unit rental. All are occupied with $1400 monthly rent each.
My offer is at $685,000
Valued at 850k to 878k
I have hard money lenders, but they won’t pay for the closing cost.
Re: Can’t afford closing cost - Posted by Ed Garcia
Posted by Ed Garcia on September 12, 2011 at 01:28:16:
Austin,
If you?re financing this deal for the amount of $685,000 I don?t think it will debt service. I think it will be negative cash flow. The problem of hard money is that its short term financing. So you better think of your exit strategy of either refinancing or selling it.
What I did was take 1400 X 4 which equals $5,600 per month. I multiplied that by 12 to get the annual gross income and I came up with 67,200. I then took 25% off the top to cover taxes, insurance, and expenses, and that gave me an NOI of $50,400. Austin, I was much too generous to only take off 25% and I only did it because it was a four plex.
That being said, the $50,400 wont even debts service the mortgage of $685,000 at 7% for 30 years. At a 10 cap the property value would be $504,000, at 9 cap, it would be valued at $560,000. At a 8 cap it would be valued at $630,000 and finally at a 7 cap, it would be valued at $720,000 so I don?t know where you?re getting your numbers.
Ed Garcia
Re: Can’t afford closing cost - Posted by Austin
Posted by Austin on September 12, 2011 at 09:34:27:
it was appraised at $860k last month.
I was planning on selling right away.
Re: Can’t afford closing cost - Posted by Ed Garcia
Posted by Ed Garcia on September 12, 2011 at 14:40:32:
Austin,
When you purchase a commercial property you?re buying an income stream. The property value is predicated on the income of the subject property.
True commercial property appraisals are usually based on income over market or replacement. 1 to 4 units can be based on market depending on what like properties are going for in the area.
Austin, I?m just looking out for you when sharing my thoughts with you. I personally question your deal. Last time I was wrong was in 1972. My wife would tell you don?t believe him. But honestly, if you want to call me at 909-944-0199 I?d be glad to discuss the appraisal with you as well as other aspects of the deal. The property does not debt service in correlation to the values you?re giving.
Who in their right mind would want to buy a property that would be negative cash flow?
I?m in California, I?ve seen this scenario time and time again in a market that is experiencing appreciation, not in this market.
Ed Garcia
Re: Can’t afford closing cost - Posted by Austin
Posted by Austin on September 13, 2011 at 12:15:46:
I’d like to thank you for the great advice and for saving me from a bad deal.
It’s great to know that there are people out there looking out for the newbies like myself.
I have other deals I’d like to run by you.