Hello BP Community,
Here is my dilemma. To get started in REI, I wanted to wholesale to get funds to purchase rental property. However, in the mist of searching for deals, I have come across some multi unit properties that are under $200,000. All of these properties state to have long term tenants all ready in place. I have found 2 properties like this (both are duplexes).
Here is my dilemma, I would need to look at some form of creative financing with as little money down as possible. What would be possible options with little money down?
to wholesale these...if you can't get them to double close where you just need little to no earnest money, then look to hard money lenders for short term funding to get it to close. but make sure you have committed buyers to cash you and your hard money lender out.
Are they actually cashflowing? 200k duplexes doesn't sound great to me... Unless the rent is pretty high.
Wholesaling multi is harder than wholesaling SFR.
Thanks for the replies. I don't want to wholesale these. I want to possibly purchase for my own portfolio. I am just trying to gauge how creative financing would play a part, if the numbers work well.
Rents on one of prospects, according to rentometer has a the potential rent for $760 per month per unit. I am still finding out more information about the properties in question to see if they are potential deals worth going after.
If they're only bringing 1620 a month and they want 200k a pop.. I would pass.
It sounds like you would be looking for almost 100% financing. The note on 200k for 30 years at a fixed 4% is almost 1k.
You would still have to account for maintenance, vacancies, taxes, insurance, etc. These look like an alligator to me.
In Georgia it's a great creative financing state, buying on terms, with lease-option assignments, subject to, land contacts, etc
So it's a cash or purchasing model, we will offer all-cash for wholesaling deal, or terms offer
Focus on great school districts where people want to sink their feet for 5 to 10 years,
if you don't get the neighborhood right, no one is going to want to buy your house on terms as in lease to own
BP is a great place to learn the basics of buying on credit financing, search for creative financing terms here and good luck to you
You could try to get an FHA loan and live in one side, although you would have to not renew one of the leases if both sides are rented. You could also ask the seller to carry a note, or look for a private loan from someone who will give you a good rate (i.e. not a hard money lender). Other than that, maybe subject to, but it's unlikely the seller would consider that unless they are distressed.
I tend to agree with @Ryan Dossey , lowest money down scenario is either FHA and you living in one side or to have a seller carry-back on the down payment.
Yeah, the numbers don't sound good at $200k for $1600/mo. Not even close. "cash flowing" does not mean rent less payment. You'd be feeding that property instead of it feeding you for sure, especially if you went 100% financing.
I tend to use a Gross Rent Multiplier, the "2% rule" everybody uses here is a 50 multiplier (50x rent). You are at 125 on this property. Retail was 99 back before the crash, and you can buy a way under that now in good areas. Some of that will depend on where you are, I imagine in Virginia Highlands and Buckhead the values skewer what you can get in rent, but if you are investing for cash flow, those areas aren't for you anyway.
Saying that, to answer your question, there are several options, most have to do with a seller carry. Hard money is way out, the interest would kill you on this kind of deal. Depending on your credit and income, you could possible go 80% conventional and a 20% owner carry back. Sometimes the owners will do 100% financing, especially older landlords that are well off and just want to get out of managing the property but dont really need the cash for anything. Never know until you ask. Other option is private lending, but you'd probably be looking at a friend or relative for 100% stuff. The people that know what they're doing like lower LTV's and higher interest rates.
I decided to skip on this for now and put my focus back to wholesaling for the time being.
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