10 House Deal
I have a chance to purchase 10 section 8 homes in the Dallas area. Owner says the properties are in good condition, but I haven't viewed the property for any necessary repairs, or finished pulling my own comps, however, here are the #'s....
FMV = $645,000
Asking = $603,000
Tax Value = $464,690
Owner Owes = $247,809
Monthly Income = $8,523
Monthly Insurance = $1,162
Monthly PI (Owner) = $2,842
Ok, ignoring the necessity to view each property (which I will do later this week) and assuming the #'s from the owner are reasonable, is this a good deal? As I see it, there is potential to make $3k a month, excluding maintenance and vacancy.
Assuming you agree, what do you think would be the best creative way to obtain the properties? I figured taking them subject to the current financing and issuing a second to the current owner for ~$350k, 30yr amortization, 5 year balloon. That would give me 5 years to refinance the properties into my LLC or pay them off. What do ya'll think?
-Chris
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Live long and be profitable![ Edited by c-brainard on Date 01/12/2004 ]
Chris,
You might consider stretching out your balloon payments so such a large amount does not occur in a single year. I try for 10 years on my seller carrybacks and usually get it. For your transaction you might have a balloon on 2 houses in year 7, 2 houses in year 8, etc.
I hope this helps.
Regards,Ed
A good deal is all relative. If he will let you assume his notes and carry the rest I woul pay over fair market value in your scenario. Why not? Nothing down and 2k plus in your pocket on the first month + rental deposits. Works for me. If I was paying all cash I would want a steep discount. how much...don't know...too many variables. I always say if you are going to make money and there is nothing down, it is probably a good thing. that doesn't happen that much in california, but when it does, I snap it up.
[addsig]
What about your closing costs? This can eat up your profit especially on 10 properties. Food for thought.
Hope it all goes well. Best of luck on your deal.