Best Way To Finance A Duplex?
Good Evening,
Long Story Short...or kinda short!
I was out looking at investment properties last week and ended up finding a 19th Century Victorian on 2.5 acres w/an additional 2000 sq. ft. steel building w/4 overhead doors right in the middle of the city....well at a bargain price (should be at least $35,000 of built in equity after a tad bit of paint and some minor repairs), I decided other than buying for resale, that I would move the family there and sell our current residence. After writing up an offer, the deal went through the next day.............. fast forward to today; I was driving by a few other investment properties and I happened to come across a Gov. Foreclosure Duplex that is incredible (probably at least 1800 sq. ft. per side, all for under 90k!); I mean, this all brick structure had all of the original woodwork, fireplaces, fresh paint, brand new carpet, new concrete stairs, etc.. Looked as if someone almost finished the complete rehab before getting the boot. Now I just purchased a property not more than 5 days ago and will be paying on two mortgages until our current residence sells (1-3 months hopefully); so my questions is.....what would the best route for financing be. Do I wait and use the built in equity from the property I just purchased to finance the duplex? Do I try to get hard money from a private investor and pay an inflated rate? Do I go to the bank and explain to them that there will definitely be positive cash from each side of this duplex? Any adivce and help would be greatly appreciated. Thanks gang.
Sincerely,
Allen Lowman
The81investor
My personal advice would be to be careful of the domino effect if you are strapped. But on the flipside it definitely sounds like a good investment. You may want to partner with someone that isnt as cash strapped, so that you arent stretching yourself too thin. Or you could always put it under contract for 60 days, and try to sell the other house you have quickly to cash out, or just wholesale the property to another investor.
Good Luck,
Kyle
There was already some good advice in the prior response.
Stop for a minute before you buy the duplex. If it is such a cherry property and you decide you want it remember the prior owner had a great investment on their hands and somehow they still lost the place.
As to selling your prior home. Drop the price and get it sold immediately. Do the math. You might be lowering the overall profits but you get to acquire the duplex and the upside there.
Alternatively you stick with your present sale plan and maybe take a pass on the duplex (other then trying to wholesale it or some other short term deal).
John
[addsig]
Thank you for the advice; all worthwhile.....I did check out the inside of the duplex and it is pretty incredible. Almost 2400 sq. ft. per side! 2 full bathrooms and 2 full kitchens per side as well (could be made into a four plex). I will probably wait and take my chances on this property becoming a bit stale before I decide to low ball them an offer.......will probably be gone, but I have a lot on my plate right now with a buy, a sell, and another offer on a "TRUE" fixer upper pending..........but man on man, I can hear that duplex calling my name
) Thanks again everyone.
Sincerely,
Allen Lowman
The81investor
You might consider getting a bridge loan for your current residence. It basically makes the payment on your existing mortgage until you can sell, then you pay it off. Just a thought, anyways...