Hello BP investor !
For the last few days, I look hard to find a solid deal under my belt. This is my second potential deal that I need good / bad / negative advise around the area in Columbus, OH. If you have time, please explain detail as possible as you can.
Here the information:
Per seller 2 bedroom 1 bath on each side. one side rented $420. Other side occupied by owner. Seller need cash. No owner financing available.
Per Rent-o-meter, 2 bed/ 1 bath can rented $525.
Per Realtor Property Resource: 4 bedroom 2 bathroom. In addition, if the Realtor Property Resource information is correct, there are three loan on the property - 80k, 86k, and 65k . Market value is 46k
Seller wants someone to take over the FHA loan. How can I write sub2 contract? Do I put "subject to existing loan"?
Mortgage: rate 3.875% = $645 30 years. / refi $860 14 years.
Here the number:
Future rent: $420 + 525 = $945
Current rent: $420
PM: $945*11% = 103.95
maintaince: $945*15% - 141.75
Gas: $120 (per seller, you have control the gas if you are owner occupied )
Property tax: 1394/12 = 116.67
Net = $420-103.95-141.75-116.16-120= -61.86
I probably will get negative cash flow until excellent PM out there help me to fill up the vacancy. I will update more after I talk to the seller. I'm trying to get first deal under my belt. Sorry if I ask too many question.
For now, should I pass or keep?
Thank you in advance !
@Jason Kha when it comes to contracts you would do well by spending a hour or two with a real estate attorney in Ohio to give you the best advice.
I wouldn't rely on Rent-o-meter for your calculations. The "pro-forma trap" will bite you if it doesn't prove to be accurate. Use the current verified income.
I see that you are in Rosemead, CA.
Why do you need to go all the way to Ohio to lose money when you can easily lose money right here in California?
Sorry of the bad joke.
I say pass.
@Ellis San Jose , Yes , I'm agree with you. Actually, the seller only have one loan. I'm like every other people starting with no money. California property so expensive unless I'm going to Barstow, or desert property. I probably will pass this one because the mortgage so high. I need to do my research to find Market value on that property.
The airfare from Rosemead to Barstow is a lot less that it is to Columbus.
@Ellis San Jose
Thank you for your response. I'm also agree with you too. It is not all of out state property worth to invest. For newbie like me (to invest), it is hard to start in California.
@Jason Kha As a newbie, every investment should make money, whether it's in California, or Ohio.
Sub2 is attractive because it can be done no money down, but is comes with many additional risks that I wouldn't recommend for a new investor.
@Darrin Carey, thank you for your advice. You are right. Do u think the payment will be lower when refinance to conventional loan? What do u think about the area that I mention above?
As always I'm appreciate all advice u guys give it to me.
Assuming the numbers are right, a house with a 45K value Sub2 a 65K or 80K or higher mortgage is no deal in any neighborhood. If anything, this is a short sale deal.
You can use any internet payment calculator to figure payments, just make sure you allow for taxes and insurance.
I don't know the specific Columbus neighborhoods like I do Dayton or Cincinnati. However, based on the property market value, and what I know of the overall Columbus market, I can infer low income, high proportion of government assistance, and higher levels of drama. Probably not a warzone based on the google views, but you would need a Columbus person for that.
With very little money, your best bet is buy performing or non performing notes.
@Darrin Carey pretty well nailed it. That's known as the Hilltop area. Not a complete war zone, but it can be a tough area nonetheless.
@Darrin Carey - Thank you. I will pass that deal. Im working on another deal that I posted on another threat.
@Tim E - Thank you for your response.What do you think about Rarig ave and E 6th ave?
Honestly, I don't know those areas well. While I'm sure there may be some deals to be had, there's probably little chance of appreciation. I do know it's a tough area.
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