Posted by doug,ky on November 29, 2000 at 11:07:18:
Your post is a little confusing, you say you want to lease option the property, but you will refinance in 5 yrs. So, are you holding the property as rental or are selling it using anlease option. Either way, when you are buying a property , you need to figure what your expenses will be: Mortgage payments, utilities, vacancy, advertizing, maintenance, etc. The above example you gave does not have enough room to support the deal considering the other things you left out. Beware of those alligators, they’ll eat you alive.
Also, getting 85% financing through a conventional lender and a having the owner carry 15% probably won’t happen on an nonowner occupied loan. Buying a 120K home for 110K using conventiobal financing is not much of a deal. Now if you can take over the existing loan “subject to” then there might be a deal depending on the terms of the existing mortgage.
ok here it goes…
ive got a house…
i can sell for 120,000 fmv
i can buy for 110,000…
those are givens
here is what i would like to do…
lets say i get a mortgage as i have heard for an investment or rental property at 80-85% fmv (lets use 85% here)
so, 110,000 X .85 = 93500
get a mortgage for 93500 @ 7.5% for a 30yr term and a 5 yr ballon…
payments are 653.77…
I will definately refinance to probably 10-15 yr after the 5 yr is up…
heres why…
the remainder
110,000 - 93500 = 16500
give the seller a 5 yr note for 16500 @ 7%
payments are 326.72
total payments are 326.72 + 653.77 = 980.49
i can rent the house for 1000 - 1500/ mo…
then after 5 yr…
my payments become 653.77 only…
so at that time refinance to shorter term
also at some point i can negotiate with seller
to pay off their note…discounted of course…
I guess…my question is…
is that a reasonable situation
2)are there lenders that would do that type of thing
can i find a lender that would give
me a mortgage @ 80-85% FMV for a 30 yr term
with a 5 yr. ballon…
on a rental property or investment property…
keep in mind that the deed stays in my name
until the house is sold…
also, i will propably L/O the house…
Doug is right. Sounds like you’ll have negative cash flow here. Why not buy better, from a MOTIVATED seller, and eliminate that problem from the start.
Plus and spread of $1,000-$1,500 estimated rent is not good when you’re looking at a negative cash flow. Need to get a tighter estimate and figure in closing/loan costs too.