Investor · Atlanta · Member since 2023 · 52 posts · 16 votes
I’m new and learning. I was able to find what I thought was a good deal. Two property package 60k/65k. When I ran the calculator the numbers looked good. More than 8% COCROI and each cash flowing more than $100 a month. Problem is the closing costs came back over $8k for each loan. I was using the suggested 2% for closing costs per the calculator. I realize they are estimates but I never thought actual closing costs would be 13-15% of the purchase price. It is making the deal unworkable as I don’t have enough liquid to cover both properties. And the numbers are below 3% now and less than $50 cash flow each. Now I am in crunch time to get creative or lose the deal.. thoughts?
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
3y
@Aubrey Ford One of the issues is that these are Low priced properties. If a title search, closing/settlement fees, recording and other “fixed” fees are $1500….that’s what they are for Any priced property. Plus of course you have lender’s title insurance. A major portion of “closing costs” are for 15 mo.s or so of insurance and property taxes for escrow. These are not really “additional costs”….they are advance payments of what you have to pay in the future.
Anyway, now you know what the real cash to close cost is.
@Aubrey Ford One of the issues is that these are Low priced properties. If a title search, closing/settlement fees, recording and other “fixed” fees are $1500….that’s what they are for Any priced property. Plus of course you have lender’s title insurance. A major portion of “closing costs” are for 15 mo.s or so of insurance and property taxes for escrow. These are not really “additional costs”….they are advance payments of what you have to pay in the future.
Anyway, now you know what the real cash to close cost is.
@Wayne Brooks I think besides not accurately calculating the closing costs, I compounded my error by trying to do a combo deal of two low priced properties. Where I may be able to absorb the increased initial outlay on one. I'm paying that increased costs twice, as its two loans... that is way more expensive than if I just bought a single property at $125k. lesson learned...