Newbie needing Financing Help - Posted by Eric Rice

Posted by Ed Garcia on March 08, 2001 at 09:28:09:


Newbie needing Financing Help - Posted by Eric Rice

Posted by Eric Rice on March 07, 2001 at 01:53:10:

First off, I really find this site helpful… I am looking at a property, 2/1/1 in North Dallas selling for $65,000… Near lake, and downtown. Home was built in 1960, but has hardwood floors, new roof, new a/c… The 1st mortgage is assumable for $55,000, $578.00 monthly payments, and seller wants $10,000 cash.

My question is how can I approach the seller or where can I go to get the extra cash for No Money Down Deal? I have done a cash analysis, taxes are $110.00 and insurance is $48.00 a month on this home. I figured an additional $50 a month for maintenance expenses, this would total a $786.00 payment… But I believe this home will rent for $900+ a month talking to neighbors in the area. I also discovered other homes in this area have sold for $85,000… So I believe there is potential equity… I was always told to stay away from 2/1 homes, but being near a downtown district, lake, hospital, and two close to two major highways for easy commute, I figured this is a great rental potential…

Seller is moving, and stated if price wasn’t met she would rent herself, next thought was to approach on an L/O?
Looking for any help, guidance, or suggestion…

Also, I have excellent credit and some equity in my current home. A credit check showed 746 out of 800… This would be my first investment, and I am anxious to start making offers…

Eric S. Rice

Re: One more thing… - Posted by Ed Garcia

Posted by Ed Garcia on March 07, 2001 at 10:05:37:


Withl your credit score, you can do 100% financing

Ed Garcia

Re: Newbie needing Financing Help - Posted by Ed Garcia

Posted by Ed Garcia on March 07, 2001 at 10:03:08:


I’m sorry to say that I don’t see this as a deal.

For example: If you put it on the market tomorrow for $65,000. What do you think will happen? Do you think that you will get 10 full price offers? I’ don’t think so. I think you will get offers between $55,000 and $60,000 of which you will make counter offers and maybe get it up to $60,000 to $63,000. Bt forget about that lets say you get a full price offer of $65,000. After paying a 6% commission you net $61,100. Now you are going to put new financing on the deal which will cost about 2 points + closing cost so lets say about $2500. Now you’re down to $58,600. We haven’t talked about taxes, insurance, some cosmetic fix up and clean up, expenses, etc.

Lets look at it as a rental. As a rental Eric on a single family rental, most if not all lender plug in a 25% cost factor for expenses and vacancy. Believe it or not, it’s more true than not. Houses have to not at the beginning eventually be painted, carpet replaced, roof, maintained, etc. Taking that figure and minusing it from your anticipate rent of $900 per month. That would leave you $675. You figured all expenses at $786. per month. Trust me, in the long run this deal will be a negative cash flow.

Eric, why don’t you go to the How-to Articles and read some of the articles. I wrote on for newbies titled “Making Money When You Buy”.

Ed Garcia

Re: One more thing… - Posted by Scott(WA)

Posted by Scott(WA) on March 08, 2001 at 08:49:22:

With a good credit score such as this, a person can get 100% financing? On a non-owner occ. property? If this is correct can you do a similiar deal in Washington state? Both my business partner and myself have credit scores in the high 700’s and haven’t been able to beat 90% loans for our investments. I’m interested in hearing what you can do!

Thanks in advance,