Posted by colvegas on January 22, 2006 at 24:04:20:
It sounds like you are leveraging with 100% financing so there is no real cash flow or break even on the rentals.You would need a contingency or slush fund for repairs and vacancies that occur unless you can get the owner to credit you back rental payments at closing but if you are getting in with nothing down he probably will not do that. One option is to have an investor come in with 10k or whatever you will need and give him a small interest in the property or refi the property after you close and pull out some equity if the property will allow it for holding time.
Another question is what is your exit strategy for these duplexes are you looking to sell or flip them to another investor or buyer or do you wish to hold for a longer term…??
I do not know the kanas marker or missouri offhand so can not help you there.
If i can help you further please feel free to email me at colvegas07@hotmail.com… I may have some options for you that are quite creative…
We have an opportunity to buy 6 duplexes with zero down. We can basically walk into the duplexes with no money into them but if we do they will break even. We won’t make any money or have a cushion for repairs. The units are in a very good community and people love to live in this suburb with few rentals close. Does anyone have any ideas on how the market is going in the midwest like Kansas and Missouri. My gut says yes, but my spreadsheet is unsure…thoughts?
Sounds like the seller is taking advantage of all the Carlton Sheets et al devotees who believe they can make fortunes with no money down. its a great selling strategy, by the way.
Sheets and others have given birth to a class of predatory sellers. When the seller is banking the deal, the seller has ALL of the bargaining power.
QUESTION: If you were buying these properties all-cash, what would be the likely sales price? How are similarly situated properties selling? How much are you overpaying for the privilege of no cash down?
I’m not saying the deal is a bad one. But you willdo yourself a huge favor if you find your own financing, and can flex some negotiating muscles.