Posted by Thomas Brock Sr on November 16, 1999 at 03:01:01:
David, Carol, & Michelle
Here’s some more info:
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Houses of similar type sell here for: 130-160 grand.
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Average time on market - hold on to your seats, 3-5 years!
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Just spoke with some mortage lenders. Their recommendation is not to try and finance this property as income property, as this type of classification is frowned upon in this area: (extremely remote, only accessible by plane, high cost of electric power ( highest in the nation, heating oil and gasoline is $2.50 gal., has to be barged in during the summer, closest major city is 350 air miles away-Anchorage, only 5 miles of road in entire town, very little infrastructure, etc.). Add to that, income property would require a commercial loan which ups the mortage rates and points, even if one could get a commercial loan. The good news is there are no property taxes. The bad news is: located on a large river which has flooded 4 times out of the last 10 years, although house is built above flood waters.
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I’m not camping in the lower 48, though I wish I were when temps get in the 60-70 below zero ranges. I have a little unfinished house that I own which is located about 500-600ft. down the road from this property. My original plan was to move into the new property so as to qualify for the principal residence loan, then move back into my little place as soon as I obtained renters. This usually takes about about 7-21 days here.
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Both houses can rent at least 9 months a year if rented to school teachers. If the houses are really nice (as these are), most will rent through the summer so that they have a nice place to come back to.
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I already have cold feet and shakey knees in preparing to put this deal together and want to just let it go, except for your enthusiatic encouragement and the fact that this is the most desirable housing section in town. There can only be ten houses in this “subdivision” and all are already taken. In addition, among the many thousands of pristine acres all around us, most every piece of land in this area is owned by the Feds, the state, or Corporations. All of these entities see no development in this area for at least another 20-50 years. I could have bought 2-3 of these properties during the 20 years that I have been in this area, but who would have thought I’d stay this long. I don’t want to make the same mistake again.
I like your idea about getting the bank loan for 5-10grand more than you will give the seller, but can this still be done without the property be classed as an income property? If so, how is this done at closing? Do you give the seller the full check at closing and then have him write you a check for 5-10 grand at the restaurant down the street?
Oh, I forgot to mention: These deals are done almost always through the mail or via fax with the banks. It costs each person up to $478 to fly to Anchorage plus the $150 plus to rent a car and spend the night. This is not a problem for the Trumps but a big dent for little guys trying to put together their 1st deal.
Please excuse the novel length descriptions but just wanted to effectively answer your questions. Let me know what you think and thanks so much for your real and experienced advice.
Extremely nervous,
Thomas Brock Sr.