Iam currently looking at purchasing my first primary residence that is a 2 family with a 1 bedroom rental.
Seller and myself are going back and forth on the purchase price. The property is in Staten Island New York and will be financed through FHA. Purchase price 430K ( rent for 1 bedroom estimated at 1100 and for 3 bed 1.5 upstairs should go for around 2300 once we move out and rent the entire house. I am trying to run the numbers and I was wondering if its worth It to roll the closing costs into the mortgage instead of out of pocket? Is that a worthwhile strategy for a buy and? hold that will be refinanced in about 5 years. Any input appreciated. Thanks.
I think that its all about your current cash position and your return on investment. It's a personal choice however I would say in most cases my opinion its best to cover the closing costs and not finance them. That's my opinion.
@Darren Sager is right, it is all about your current cash positon and ROI. If you are good on both and feel comfortbale with where you are at, I would tell you to roll them in and have your tenants pay the difference.....
Igor, I myself am looking for a 2 family deal as well. My plan is include the closing cost and factor that into my payments. Hopefully the rental income i plan to collect will cover my payment with positive cash flow.
@Igor Z. - Typcially it depends on what you are trying to get out of it. I am assuming you are looking to rent this property and build a cash flow. Now lets look at the numbers
Purchase Price - 430,000
Down Payment - 15,000
Closing Costs - ??
Rental Income - 40,800/year (assuming 3400/month)
Expenses (50%) Rule - 20,400
Mortgage Costs - ??
If you fill the motgage payments and closing costs, you would be able to calculate COCR/year and then make a decision if it is worth investing. And then the decision is completely is up to you, because what may work for you may not work for someone else.
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