Thanks for your ideas. I didn’t plan on the other two
units to make the third one free, but I did want to
make it so that if one was vacant, I could still pay
the bills. I was hoping that my “rent” payment would
go toward maintenance, insurance, and other costs while
the rent payments from the other two units pay the
mortgage and property taxes. This property is located
in NY state, and taxes are steep. Thanks again!
-It has 2 units rented for $600 a piece. The empty unit
which also rents for $600, I want to move into.
-I want to put $5000 down and finance the rest at around 6%.
I’m not necessary looking for a DEAL; I mostly want a stable
place to live while I gain some experience. What do you
recommend I offer? Property has been on MLS for over 6
months and price has dropped $19,500.
I realize there are a million variables, but assume this
place has low maintenance costs and everything is in pretty
good shape.
Given the property taxes, this has got to be Texas. What assessed value corresponds to this property tax? You mentioned they lowered the prices $19,500. If you buy the place, try to get your taxes reduced based on the new assessment. There are companies that do this if you do not want to do it yourself. I guestimated (based on virtually no real facts) a 9% CAP rate. Stop my previously mentioned video at 1:55 minutes to see an example of the data you need to collect to get a more accurate CAP rate. This CAP rate is well above the loan constant of 7.19%. No reason to give a full price offer. Offer a lower amount and see what they counter. This will allow you to judge their determination to get full price. A higher CAP rate never hurts. Don’t expect two units to make a third unit “free”.
As you mentioned there are many factors to consider: employement growth, buildings nearby (schools, churches, parks, wrecking yards, shopping malls), building age, natural hazards, crime rate and traffic.