Would you pay more???? - Posted by kac2010

Posted by Brent_IL on May 28, 2002 at 13:29:06:

1 - The number you found at the courthouse is not an appraisal. In some counties, those that tax at full value, the amount might be within 10% of FMV. In the vast majority of counties, the amount that is being taxed is much different than the FMV of the property. Try to get a real estate agent to run some sold comps to verify.

2 - If your goal is to have a lower pay-off value, you’re right. Every extra dollar that you pay saves more interest at higher interest rates than it does when rates are lower.

Would you pay more??? - Posted by kac2010

Posted by kac2010 on May 28, 2002 at 01:42:09:

This is really a great sight to use for any matters concerning real estate. I must confess that I am a newbee, but last Sept. I took the plunge and bought a Duplex in another city 16 miles away. I got a great deal and It created positive cash flow from day one!! I must confess that I haven’t purchased any courses to really get involved with the creative side of real estate and I know that if I am to be a real “player” that the more info the better. But, for now I’m content to read the posting and check the archives for info, which is really, really a big help!!!
Now moving to the matter at hand, Deal 1 is done and now I’m ready for deal 2. This is where you guys/gals come in!!!
Would you pay more???
Property appraised @ $28,500.
S/B able to get for $33,000. (Listeing expired with
realtor. I had bidded $30,000 when listed… no go,
he wanted $35,000. The plac is in fairly good condition
roof okay, not in need of any major repairs. As far as
rent, we’re looking at 300-325 each side based on
another duplex he owns around the corner that isn’t in
as good shape that rents for $325 each!!! I’m in the
process of taken out a second on Deal 1. I talked to
the banker who processed Deal 1 and s/b be able to
pull out 8/9k in equity for the down payment(thanx you
guys/gals for the info I learned thru your posting!!)
As for as the numbers, 2nd mortgate should only need
7k @ 6.25 var. looking at 15 yrs PI $60 bucks a month.
1st mortgage on Deal 2 w/20% down $26,400 @ 6.25% var
looking at 20 yrs at $226 a month ( var rate locked in
for only 1 year, couldn’t get longer. Max. out at 14%)
So I know payment may vary from year to year. If
interest sky rocket will make extra payments to keep
payment lower. Insurance/taxes about $80 per month.
Looking at $366 to cover 2nd and 1st PITI???
Positive cash flow $234-284 before expenses??? Okay,
maybe not a monster of a deal, but hey just starting:-)
Oh yeah, place stays rented!!!
Thanx in advance KAC
PS. If I (newbee) can make one deal I know you other
newbees can. Oh yeah Deal 1 has positve cas flow of
around $320 per month before expenses, which are very
low. Not big killer numbers but they add-up!!!
So for all the newbees in the world, small deals can be
as affective as larger ones (paid 25k for Deal 1)
So, what are you newbees waiting for…GET YOUR FEET
WET!!! Where you at GL, I love your wisdom (GRM)!!!
Starting my bid @ 29k okay with paying 30k. Sorry, I
can’t shut-up. I have already sent letter to seller
stating that I noticed your listing has expired and I
am interested in purchasing. Blah,blah,blah. He called
back!!! Will call again, missed him Saturday.

Re: Would you pay more??? - Posted by Brent_IL

Posted by Brent_IL on May 28, 2002 at 07:04:17:

Well, giving the seller his asking price and paying all cash is less than creative, but the numbers look good.

I’m curious about the appraisal. The appraisal process would have taken the income into consideration to arrive at a probable FMV of $28,500. The seller wants more than that. Was the appraisal done by a licensed appraiser, or is this the value carried on the tax rolls for tax assessment purposes?

Mortgaged notes aren’t generally written as a constant-principal-payment loan with interest paid on the unpaid balance. Unless your variable loan is interest-only for twenty years, it will be fully amortized. If interest skyrockets to your 14% max, making extra payments won’t keep the payments lower. The interest hike will push the payments higher. Any additional monies that you would pay will go toward paying down the principal. It will shorten the loan?s term, but your monthly payments will remain at the higher level and not be reduced. If the cash flow pays for it, I wouldn’t be concerned unduly.

Re: “I’m curious about the appraisal?” - Posted by kac2010

Posted by kac2010 on May 28, 2002 at 11:45:24:

“I’m curious about the appraisal?”
I went to the court house to check the taxes and that is where I found the appraisal. I guess my concern is how accurate are appraisal?? “Well, giving the seller his asking price and paying all cash is less than creative.” Right now, this early in the real estate game I’not to concerned with being creative. Like I mentioned before I haven’t studied any courses so i don’t want to complicate financing.“If interest skyrockets to your 14% max, making extra payments won’t keep the payments lower.” From what I understand, you can lock a loan in for 1,3 or 5 years. If interest “runs-up”, I would start making extra payments on princple where as when time to redue loan the princple would be lower. Hence, the
lower payment. I do think that paying 2-2.5k more then appraisal is not the best of routes but this is a small town and not to many duplexes are for sell. Thanks for your reply. it helped a lot. Peace!!