Please Take A Look At This Problem
Ok
Asking Price - 263,000
Appraised Value - 273,000
Gross income a month - 2,500
New leases and dependable tennants
I have obtained financing but I have to be Owner Occupied. I do not want to live there because it is a 3 Family with great Rents all with leases and have lived there for years. So I have to think of a way to get financing without owner occupied.
I want to agree on a sell price of 255,000 but have the seller sell at 273,000 and make a contract where he would give back the 19,000 at closing. I then was going to take out a 5,000 loan which would give me 22,000 down payment money........Before all of this I would borrow 22,000 and pay back the loan plus 2,000. Hopefully my mortgage company will except that as enough of a downpayment ???
Does anyone have any suggestions on how I can do this or a better way..?? Please I need Your Help! :cry: :cry:
Before you fall in love with this triplex and its dependable tenants...have you looked at your cash flow carefully? Considered expenses of operation? Sorry to strike a negative tone, but your numbers don't look so great at first glance, and your financing plan sounds a little shaky if the numbers don't support payback.
I tend to agree with the previous post, it doesn't appear at first glance to be that cash flow positive when you take all operating expenses into account. Many lenders will give you a 100% investor loan, the interest may be a little higher but usually not that bad. :-?
$2500 a month for 255k is not that great for a cashflow deal. And with 19k being more than 6% of 255k, no lender would approve of this so you would be doing it off the books which is not legal.
I thought that there is a 1 percent rule..2,500 is 1 percent of 250,000????
If a property passes the 1% rule it is worth looking at further.
If it doesn't, you might as well toss it aside unless there is another reason you want the property.
It is clear to me that you need to do some more reading before you purchase anything!!
GOOD LUCK
what does owner occupied mean? it means you are moving in ( !!!!!!!!), so if you are not planing on that, the deal is over.
Dont cheat the system you only hurt your self in the long run.
j_owley,
On a loan application the lender will ask if the property is intented to be owner occupied as a primary residence, 2nd home, or an investment property. Lenders have statistics that show that there is a greater default rate on investment properties and 2nd homes.
You'll get a lower rate and likely a smaller down payment by saying owner occupied but doing so with the intent of something different is loan fraud.
I agree with MyFrogger. If the monthly income is 1% of the purchase price, that is a good starting negotiation point, without some nice terms or a unique situation, I would not buy a property that it's monthly income was only 1% of it's purchase price
Thats actually not totally true about them not following you home after closing... lol. They occasionally hire BPO companies to go see if it is tenant or owner occupied. I have actually done one as a real estate agent where I was paid $20 to go knock on the door and ask if they were the owner or tenant of the property. I'm assuming that is what this was for.
Quote:
On 2004-11-17 00:50, bellybean wrote:
Only because you asked...... I've never had a lender follow me home after a closing to see where I went. You would need a PO Box for your mail. I've bought houses as an owner occupant before and then not lived there.
Since I agree with the other posts about how your numbers look a little shaky, I suppose if you ended up in foreclosure in the future and it came to light that you never occupied the property- you would probably be in some trouble.
Before anybody yells at me- I'm just answering the guy's question. I'm not recommending it.
It is common for a lender to do a field review after you've closed.
the 1% rule is just a basis for a general idea...much more should go into your analysis...for example...
Do the tenants pay all utilities? If so...you are getting to a better price...
If you pay all utilities...its getting worse...
Lots of things to consider...also, TAXES! Mil rates can vary by alot! In my area, mill rates are in the 3-4% range. I've seen anything from 2.5% to 5%. Just some things to consider...
Oh yeah, and somebody mentioned greenpoint mortgage service....one note...they take FOREVER to get back to people...Don't plan on closing quickly. That is from my experience with 2 loans through them.
ralphes12
Maybe this will help you in your 1% rule train of thought.
http://www.thecreativeinvestor.com/modules.php?name=News&file=article&articleid=523
Larry
I agree with the article in that 1% is a starting point. I would not buy a property that only rented for 1% regardless of area, just my .02