Posted by Jeff on May 18, 2007 at 15:17:47:
I would contact your bank to make sure
Jeff
Owner financed duplex - Posted by Bill (WI)
Posted by Bill (WI) on May 18, 2007 at 08:29:44:
I have a seller willing to owner finance a duplex for me. He wants $10,000 down, and will finance the balance of $59,000 at 5.5% amoratized 30 years with a balloon of 2 years. The owner pays utilities to the tune of about $175 a month. Taxes are another $130 a month. It generates rent of $1000 a month. My $10,000 down will come from a home equity line at 8.5%. Does this seem like a good deal for me? The rents are about as high as they come around here for a property under $100k. The building is older and I dont see it apprecating much. It would be mostly for cash flow, assuming there would be any. Thanks.
Re: Owner financed duplex - Posted by Jeff
Posted by Jeff on May 18, 2007 at 08:55:53:
OK this is how I see it
$392.00 mortgage payment
$175.00 Utilities
$250.00 2nd (your equity line)
$130.00 Taxes
$947.00 per month
$53.00 per month cash flow
$636.00 1st year cashflow
$840.00 7% Vacancy rate
$000000 ??? maintenance???
puts you negative
Here are some things to check have you factored in a vacancy rate for your area (national average is 6.4%)? Have you seen the property inside and out? Is there a lot of maintenance that needs to be done? What is the rental history?
The reason the rent might seem high is because he is paying utilities actual rent is $412.50 utilities $87.50 per unit.
It may not be all bad can you rehab the property to attract some higher paying tenants or even flip it?
Hope this helps. Good luck!
Jeff
Re: Owner financed duplex - Posted by Bill (WI)
Posted by Bill (WI) on May 18, 2007 at 09:05:51:
Thanks Jeff
I come up with my mortgage payment being $335 a month. My line of credit is interest only at about $75 a month. Thats where I came up with positive cash flow. I could be easily be missing something though.
Re: Owner financed duplex - Posted by Rich-CA
Posted by Rich-CA on May 18, 2007 at 11:57:24:
Did you already draw on the credit line and get a statement for it? if not, expect the payment to jump beyond the $75 a month. if so, then never mind.
Re: Owner financed duplex - Posted by Jeff
Posted by Jeff on May 18, 2007 at 11:35:17:
Well that puts you in a better position
now it appears the cash flow is better $285.00 per month.
$3420 - annual cash flow
-$840 - Vacancy rate
-$??? - Repairs, lawn care and snow removal (if applicable)
Looks good! It also seems there is room for improvement and while you might not get much appreciation you can probably get some “sweat equity” and you get to write of the depreciation. Also if you could slowly (1 by 1) get the utilities in the tenants name you would be sitting pretty nice. Good luck =)
Jeff
Re: Owner financed duplex - Posted by Bill (WI)
Posted by Bill (WI) on May 18, 2007 at 13:36:43:
I have not used the line yet. I was just simply figuring interest only on $10k at 8.5%. I know I wont be paying it off by doing that, but why would it be more?
Re: Owner financed duplex - Posted by Rich-CA
Posted by Rich-CA on May 18, 2007 at 15:47:33:
OK. So there is no current payment of $75/mo, that is your est of what you’d pay if you used the line. My mistake.