Is this a good one?

[tiredofworkin]

I have been looking at buying a sfh, list price is $131,950, currently it is a 2 bedroom(listed as a 3 on the MLS). Prior owner made a 3 bed a 2 bed, so it will need to be converted back, no big deal, for me. Plus a little paint here and there. Other wise the place is pretty complete and in decent shape. Rent in the area according to www.rentometer.com and local management indicates that this place will pull $1000-$1100 per month in rent, as a 3 bedroom, with some fix up.

It is owned by a bank, and it has been on the market for over 90 days, so I was thinking of offering the bank 10% down if they will carry back the rest at an interest rate of 1% over 30 years?

Realistic or ?????

Does somebody have a better suggestion?

I am looking for some cash flow out of the deal.

 

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[Runum]

How much is the insurance and property taxes for the house? I tried that rentometer. Sorry, it is not accurate. It doesn't consider square footage and other amenities. All 3 BR houses in a neighborhood are not equal. You can try to offer and see if they will jump. What makes you sure that the house is worth the list price?

 

[tiredofworkin]

How much is the insurance and property taxes for the house? I tried that rentometer. Sorry, it is not accurate. It doesn't consider square footage and other amenities. All 3 BR houses in a neighborhood are not equal. You can try to offer and see if they will jump. What makes you sure that the house is worth the list price?

Sorry should have included that.

Insurance will run $600/year as an investment.

Taxes are $1700 a year.

MLS Comparables show a comp price in the neighborhood of $180,000, based on the neighborhood and other houses in the county I feel it is easily worth that.

 

[tbsells]

I respect the creative thinking process you are going through in trying to make this cashflow. But, the bank won't due the 1%, 30 year loan. I'm a real estate broker that does alot of REO deals. I have never seen a lender/owner due any special financing. In fact, they often due not want to finance the deals at all. I had an asset manager tell me that they prefer financing by another lender. It takes away potential conflicts of interest, possible incentives to commit loan fraud, etc. Its just cleaner if another lender finances the deal.

With market conditions the way they are it would seem like lender/owners would start offering special financing to get these houses out of their inventory. It sems to work for car dealers. Just about every year in the late summer or early fall most US automakers start offering 0%, 60 months. Obviuosly it helps sell cars. I'm not sure of all the specifics but I think there are regulatory issues that make it very uncomfortable for lender/owners of real estate to due the same thing.

 

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[tiredofworkin]

I respect the creative thinking process you are going through in trying to make this cashflow. But, the bank won't due the 1%, 30 year loan. I'm a real estate broker that does alot of REO deals. I have never seen a lender/owner due any special financing. In fact, they often due not want to finance the deals at all. I had an asset manager tell me that they prefer financing by another lender. It takes away potential conflicts of interest, possible incentives to commit loan fraud, etc. Its just cleaner if another lender finances the deal.

With market conditions the way they are it would seem like lender/owners would start offering special financing to get these houses out of their inventory. It sems to work for car dealers. Just about every year in the late summer or early fall most US automakers start offering 0%, 60 months. Obviuosly it helps sell cars. I'm not sure of all the specifics but I think there are regulatory issues that make it very uncomfortable for lender/owners of real estate to due the same thing.

It doesn't hurt to ask. Thanks for the reply, at least I have some insight from somebody whose in their shoes!

Thanks for you comments. I am learning a lot!

 

[razda]

I recently decided that I needed get out and actually do something and not just read about it so last week I started driving around. Man it is amazing what happens when you get out of the house. I came across 2 duplex's that I would like your input on.

Duplex #1 $179,000 2,000 sf
Each unit is 3 Bd / 2 Ba
Unit #1 is rented - Unit #2 is ready to rent
Unit #1 rent $815 - Unit #2 app. $775 total rents $1590
Built in 1977 and yearly taxes are $778
utilities are metered seperately
on a corner lot with chain link fence
each unit has covered parking and storage unit
has new furnace and central air, new roof, owner is motivated

Duplex #2 Auction starts at $100K (auction held in nearby town 50+ miles)
Each unit is 2 Bd / 1 Ba (total 1872 sf)
Unit #1 is rented - Unit #2 is ready to rent
I assume each will rent for $600 - $650
each unit has covered parking and storage unit
this one goes to auction early next week so it may be to late. Procrastination hurts at times.:smx4:

Am I missing anything? Doe either of these sound like a good deal?

Thanks in advance for your advice.

 

[razda]

OOOPS!

I wanted that last post as its own thread. Can somebody move it for me?

 

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[Inphinity]

Duplex #1 $179,000 2,000 sf
total rents $1590
yearly taxes are $778

How much would you be putting down, how much are insurance / maintenance etc?
Is $179k actual market value, do you think you can get it for less?

Duplex #2 Auction starts at $100K (auction held in nearby town 50+ miles)
Unit #1 is rented - Unit #2 is ready to rent
I assume each will rent for $600 - $650

You're "assuming" each will rent for $600 - $650 - based on what? Is this what Unit1 currently rents for? Is this an appraisal?

For both properties, work out your costs (See JScott's post above for a good example), and then work out whether the rents (make sure you include average area vacancy rates, and a realistic interest rate on the loan) after expenses will provide a positive cashflow.

For the second property, because it is auction, you will also need to work out what the maximum you would/could pay for it to still work out as a good deal is. If you could get it for $100k or thereon, it looks from the bare info we have to be a good deal imo. If it gets bid up a fair bit, then it quickly loses appeal.

 

[rcardin]

I personally use the 1% rule. Take the price of the property and 1% should be approx your monthly payment without a huge down payment. I don't see either one of these properties mentioned as cash flowing using the simple approach.
In my area it would be hard to get over $1000-$1100 a month on a $100,000 house. I personally am looking at 60-70k houses. Must be 3br 2ba with garage. If you can get into these they will cash flow approx 100-200 a month. Basic rent on a 3/2/2 is 850-1150 depending on the neighborhood. I am getting $800 on a 2/2 half duplex and $965 on a 4/2/2.

It all depends on the area