Posted by Brian on August 05, 2010 at 20:14:14:
Thanks Ari, I would definitely be willing to ask for
seller financing, but per your advice and the advice of
others, I’m rethinking this. I don’t want to get over
extended and end up in trouble at this point in my life.
I’ll leave the risk taking to you guys!
How do you buy an owner occupied 4-plex - Posted by Brian
Posted by Brian on August 05, 2010 at 18:36:29:
Hi, my wife and I are retired living on Social Security.
Our income is $2,500 a month and we have $30,000 in savings.
We would like to buy a nice 4 unit building and live in one
of the units. However, I called some lenders and they say I
don’t have enough money for the down payment, and I can’t
use the income being generated in the other 3 units to
qualify…In other words they are telling me I have to buy
this thing strictly based on my own income, and the down
payment would be 25%, which I don’t have.
We think the properties get nicer around $200,000, but it
all looks like junk around $100,000. I’m not a handy man,
and we aren’t looking to make a lot of money or expand–we
just would like some security.
Any ideas on what to do? My credit score is just over 700
and my wife’s is 740’s.
Thanks in advance for your help!
Re: How do you buy an owner occupied 4-plex - Posted by Craig Grella
Posted by Craig Grella on August 07, 2010 at 11:07:43:
Seller financing is the way to go here, but you don’t need to get 100% seller financing. You could put some money down, and finance the rest using hard money as long as you can still maintain positive income.
If you’re not particularly handy you might think twice about becoming a landlord, or at least factor management or a handyman into your expense cost before you buy.
You can also think about bringing in a partner to split costs with you. Think about checking out some local banks and auctions. You can still find four units like that in those places.
Good luck.
CreativeREO
Creative financing for real estate
www.creativereo.com
Re: How do you buy an owner occupied 4-plex - Posted by Eddie
Posted by Eddie on August 06, 2010 at 08:27:38:
Brian, try to find someone in trouble,
behind on their payments, or someone
who just wants out and tailor the deal
with no interest payments. It may be
harder to find but they are out there.
Good luck.
Re: How do you buy an owner occupied 4-plex - Posted by Bill Jacobsen
Posted by Bill Jacobsen on August 05, 2010 at 19:45:40:
Hello:
I am all for going slow when it comes to buying real estate including your home. Let me run through some numbers using a $100,000 property. If you put down $25,000 and take a $75,000 loan at 5% for 30 years your payments would be $402.62 per month. If you could find a place yielding a cap rate of 8% you would generate net income of $6,000 per year by renting out 3 units. After subtracting out $4,831.44 in mortage payments per year you would net $1,168 or $97 per month. If you can afford $625 on your current income that plus the $97 could be saved each month. In 6 years that would be equal to $51,984 Plus interest earned and you would have $32,548.47 equity in your 4-plex plus inflation. You could sell the property and buy a more expensive one. You could actually do it in less than 6 years.
In my humble opinion, you should buy a less expensive property until you can afford it.
Bill
Re: How do you buy an owner occupied 4-plex - Posted by ari
Posted by ari on August 05, 2010 at 19:23:26:
If you can, try to find a seller who will carry back the note. These are hard to find, but they are out there. You will still have to put something down as the seller won’t usually let you purchase his property for zero down. But maybe you can get them to take 10% down. You also want to make sure you have reserves for the property so make sure you don’t extend yourself too much. Hope this helps.
Re: How do you buy an owner occupied 4-plex - Posted by Brian
Posted by Brian on August 06, 2010 at 10:48:16:
Thanks Eddie. I live in NYC and I don’t have a car
because its not needed where we live. Its a little
hard to do searching for these motivated sellers 50
miles from where we live. I’m definitely open to
creative solutions, but as I mentioned in another
reply, I think I want to keep from getting over
extended. I mean even if someone were to allow me to
buy the property from them under amazing conditions,
would I want to have the debt burden and risk spiraling
out of control if I can’t rent the place or I run out
of money maintaining it. I think now I’m going to try
to find a duplex in my price range and any rent I
collect will be gravy that I can use to fix up the
place, save, build equity, and maybe move to a bigger
brighter future down the road. Thanks for all your
ideas!
Re: How do you buy an owner occupied 4-plex - Posted by Brian
Posted by Brian on August 05, 2010 at 20:10:44:
Thanks Bill, That sounds like good advice. Start with
what we can afford and build from there. I just have
to find a $100,000 property that I can make my home. I
was hoping there was a way to finagle my way into a
“pretty” property, but I can see how I can get into a
lot of trouble over extending if I don’t know what I’m
doing.
Brian…