Posted by Ed Garcia on July 08, 2001 at 14:45:11:
Robert,
You really haven’t given us enough information. You ask us how you can get this house, but we don’t have any information on the house?
If it’s a good buy? What is it worth? What is owed? Will the seller carry paper? Will the seller sell it on a Wrap-around? She may even
consider a partnership, if you can convince her that you are going to cover the debt-service.
We also don’t have any information on you?
The fact that you mention that you want to rent it as a section 8, tells me that market rents are LOWER, or you wouldn’t be thinking the
way you are. If it won’t be positive CASH FLOW with market rents, then I wouldn’t buy it.
I buy property based on economic sense, which in this case would be market rents. I want to experience cash flow and appreciation, and
my concern when purchasing based on section 8 rents is that it could be in a neighborhood that will experience little or no appreciation.
That’s important for financing and re-financing. Don’t get me wrong; I have no bone to pick with section 8 rents. It’s just that the proper
way to analyze this is based on market rents.
If the seller carries back and you don’t have enough equity for a refi to take her out, then it’s a bad deal for both of you.
Ed Garcia