The 8 Properties I Am Considering.
I have posted topics about this before.
It just sounds very nice to be able to get $10,000 back at closing per property.
But is it worth the possible negative cashflow?
I'll give some numbers
Purchase price is $50k, Appraised $73k
Finance @ 90% $73k = $65,700
minus 50k =15,700 minus 5k for closing (worst case & possible points)
Leaves 10,700 for a cashout.
Payments $587 (PITI) minus my "Property Maintenance Co." fee (so they call therselves) $65 =$652
rent for section 8 runs $650 to $700 for
Would 10k cash be worth a possible $2 negative cashflow (assuming I can't get better than 7% Int.)
My thinking on this is, well even if I hold the property for 4 years (48 months) at $2 a month I'm only losing $96.
I guess what it comes down to here is, would this be a good way to start out? Get about 7 or 8 of these cash out deals, where you're not losing but $5 to $10 a month on each...if you're losing at all, cash out $70k -$80k, and have some money to invest on some real income generating properties?
Now, I won't be losing on every property, actually I should come out ahead with the 8 I have on mind....granted $392 pos cashflow for 8 properties isn't very good, but...If I can cash out $75k then I think this isn't such a bad deal.
I could do a lot with $75k.
Just wondering if maybe I'm not taking something into an account. Or you think I am wrong about this idea.
JB
[addsig]
Do you have financing arranged?
Mykle
Yes, financing is not a prob
JB
[addsig]
If a property has negative cash flow then I NEVER take it, especially if it is in the lower income side of town. You will invariably have more problems with tenants there, get less appreciation, and in general be more at risk.
Why not get a 80 or 85% ltv, have a smaller payment, positive cash flow, and be more comfortable with the deal? You can still get significant cash out to move forward with, always plan for the unexpected.
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Hope this Helps!
Bill[ Edited by telemon on Date 03/21/2004 ]
I was wondering the same thing that Telemon said. He took the words right out of my mouth. Get less money but have better cash flow or use the 75K to get some good cash flow deals. Do you have extra, steady cash flow from your regular job? Have you figured vacancies sufficiently?
I have been structuring similar deals as what you are talking about. Right here in FL too. The challenge for me was getting banks to loan on the appraised amounts and not the selling price. Most of them always wantred to loan on the lesser of the two. I ended up having to pay cash for properties and then refying in a month at appraised value. Even then they only go 80%.
You and I should network some and learn from each other. Jax is only 2 hours from me. What part you in?
Also, a bank only gives you credit for 76% of your rent, so according to them, you'd be losing 25% per unit, and VERY quickly your DTI's will be all backward, and nobody'll loan to you.
Quote:
On 2004-03-21 07:02, Ricker wrote:
I was wondering the same thing that Telemon said. He took the words right out of my mouth. Get less money but have better cash flow or use the 75K to get some good cash flow deals. Do you have extra, steady cash flow from your regular job? Have you figured vacancies sufficiently?
I have been structuring similar deals as what you are talking about. Right here in FL too. The challenge for me was getting banks to loan on the appraised amounts and not the selling price. Most of them always wantred to loan on the lesser of the two. I ended up having to pay cash for properties and then refying in a month at appraised value. Even then they only go 80%.
You and I should network some and learn from each other. Jax is only 2 hours from me. What part you in?
Well I already have a lender willing to do the deals, I have to leave town for two weeks after this week, but by the time I get back it should be time to close. I have also considered taking out 80% to 85%...and after I run through some numbers I'll probably go that route.
Ricker I live in the beaches area, if you want to network and share some info, just pm me.
JB
[addsig]
Who is the lender? I want to use them for a few loans, AND make sure I don't own stock in them! :-D
Mykle