Is there potential in this deal for the owner of this property as well as for myself to make a any profit. The property has 1 original owner whom is the current owner 2 levels the upstaris has a loft with 3 bedrooms. The lower level has 1 guest bedroom 2 sitting areas, dinning area , kitchen , laudryroom . The home has 2 full bathrooms in addition to the Master bedroom with a full master bath w/spa tub. The owner is elderly with front end mortgage principal balance of $140.5k and a ballon payment at the end term of the mortgage of $62.8k. The financing at this time out wieghs the value of the home. I am new to the Real Estate business and want to assist a family friend with the best option. What options can i offer if any?
The owner can refinance to a mortgage without a balloon or pay enough principal every month so that there is no balloon payment at the end
Are you planning to hold onto the property, and renting it out? From your description of the property, am I understanding that it has two units you can rent? If so, what can you get for rents in that area? Once you have that number is when you can work out the numbers to see if it is a good deal. If you are buying and holding then the nets to work into your analyses would be: (1) mortgage, (2) maintenance fees, (3) property taxes, (4) homeowners insurance, (5) water bill, (6) property manager if you do not intend to manage it yourself, and (7) future property maintenance, suchas roof & painting, and concrete.
This does not include closing costs. After you calculate your closing costs and expenses, if the property has a cash flow of at least $200, then you have yourself a good deal.
If you want to buy and flip it then you calculate the FMV price x 70% and that should give you the maximum price that you should purchase the property for. I would still calculate the numbers, but that is a rule of thumb to tell you if it is worth your time to calculate the numbers. To get the FMV for the address of the property your thinking of purchasing, find a realtor in that area. They should be able to provide you with a list of comps. I would also want to know what properties similar to yours sold for, and how long they were on the market before they sold.
Hope that helps you.
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