Need Some Opinions
I have found a residential 1 unit Co-op that I can rent it out asap. After I rent it out, I will be owing approximately $75 every month after all expenses including the mortgage(negative cash flow). For long term investment and appreciation of approximately 4 to 5 yrs. Is this deal actually worth it?
I think most investors will tell you NEVER to take anything that doesn’t have positive cash-flow. I’ve done it with negative cash-flow before, but only when I had a ton of equity going in and taking cash out at closing. So, in a sense, I just took some of my positive up front instead of a little bit each month.
But there are a few things to keep in mind.
First, there may or may not be any appreciation over the next 4-5 years. So, don’t count on it.
Second, how much below market are you buying the property? How much equity would you have going into the deal?
Can you raise the rents to change your cash-flow position?
Also, when calculating your monthly expense, make sure you allow more than enough for maintenance and repairs, vacancies, etc.
But just looking at what you’ve posted, it doesn’t sound like a deal.
Just my initial thoughts.
If you have renters knocking at your door why not ask for at least $75 more so you can break even?
Speaking of PMI:
When a buyer puts 10% or less cash down, most lenders require mortgage insurance, known as PMI, which is payed for by the buyer. The cost of PMI is about 1/2 percent of the loan amount annually. So, on a $250,000 mortgage, PMI will run about $1,250 per year...
Instead of taking out one mortgage, you combine 2 mortgages to come up with 90% financing and therby avoid PMI. You could combine a 75% first mortgage with a 15% second mortgage. Or, you might combine a 70% first with a 20% second mortgage. You could save as much as $100 to $150 a month using piggyback financing, depending on the size of the loans involved
Just my 2 cents
Bill
Here is the link to that story.
http://seattletimes.nwsource.com/html/realestate/2002688263_harney18.html
John (LV)
Conti and Finkle have a pretty good book on the subject. You can download a free e-book version at this link
How to Create Multiple Streams of Income Buying Nice Homes in Nice Areas With Nothing Down!
Wow Doug must have been really burned by a realtor!! I can tell you as an investor if you are not using realtor services you are really missing out on lots of oppurtunities to find great deals and market your properties. As a realtor, I have never lied to get listings, expecially listings that are unreasonable about the value of the property. Also, as a realtor I must present ALL offers to my cleint no matter how crazy they are.
About L/O they are usually great for the seller but no so good for the buyer ( puts you in a hard bargining position when you are asking the seller to take on financing for you). How bad is your credit?? There are tons of lenders out here that loan on bad credit..
PS.
Is it a better idea to get your own agent?
Or call the listing agent?
Again Thanks
getitqwik -
I find it interesting that Sham has identified him/herself as a NY agent in earlier posts.
Jim
Thanks Dirtman89,
what your suggesting in the state of Georgia is no different from placing a lien on a property or creating a repair invoice on the property to get cash out . This is considered fraudulent and many people have gone to jail for taking this creative approach.
Are there any other suggestions?[ Edited by ablessedmind on Date 12/25/2005 ]
bump
You could just sign a regular purchase and sales agreement (with an assignment clause) and assign it to your buyer for an assignment fee.
Or you could put an option on the property and assign the option too.