First deal, is it this easy??? - Posted by JT

Posted by Ed Moore on January 06, 2004 at 18:27:25:

Off hand, you’ll have to wait six months to a year to refinance at the higher value during which time you’ll have to collect rent to pay on your lines of credit. That means you’ll want to keep a reserve of cash in case your renters decide to be late one month or two or three or more. Or the water fills up the basement and you have to hire a plumber to drain it, diagnose the problem and fix it. Or your water heater goes out or that $2K in repairs ends up being $4K or anything else that can go wrong does.

You’ll also have the closing costs of at least title and transfer fees to contend with. That won’t be too much if the whole thing is private. Of course if you do that, you’ll be the one in charge of making you have sure all your ducks are lined up in a row legally speaking.

So as long as your renters pay on time for six months to a year(whenever you’re able to refi) and the rent is more than your interest payments and monthly property management expenses, you’ll be fine. Really, as long as you keep that stuff in mind and the property remains in good condition and maintains value until you refi, you’re fine.

First deal, is it this easy??? - Posted by JT

Posted by JT on January 06, 2004 at 12:02:21:

I have obtained 80k in lines of credit. I have found a house from a wholeseller:

  • asking price of $75k
  • needs $2k in repairs
  • ARV is $120k
  • currently rented as section 8
  • section 8 rent is about $925/month

It is not in that great of a neighborhood, but other houses in the area are selling for slightly more. I was going to buy the house and do repairs with my line of credit, which will total about $80k. I would then get a mortgage for 80% of the ARV, which would be $96k. After I pay back my lines of credit, I will be left with $15k. I would then take this extra money and reinvest it in another property. Is it really this easy? Am I missing something here? What am I missing?

Re: First deal, is it this easy??? - Posted by Mike

Posted by Mike on January 07, 2004 at 09:46:48:

Make sure before you finance that there is no prepayment penalty and that you would be able to refinance with no particular time constraints. If it is possible