First Property - Please Offer thoughts etc - Loan Closing Costs Seem High too

7 Replies

Hi Folks,

Am a relatively new BP member and have been reading quite abit.  Currently in contract to buy a duplex in sunnyside Houston tx for 138K (don't know if any of you have duplexes in that area - there are quite afew that I have seen just driving around) it's a slightly blighted area but I think I will find tenants with no issue. Property was a foreclosure and am buying it as is from Fannie Mae - Inspection already done and it seems ok with the exception that the furnace and ac on one of the units does not work. There are several duplexes like mine in the area and they rent for between 1100 and 1250 a unit. Quite abit of section 8 tenants as well (from my research) So am looking at putting 20% down on the loan and the property should generate about 2400 a month in rents.   

Am using a broker for my loan and it seems that the fees are high to me. my credit score right now is 705 and am putting 20% down - review the fees below and let know what you think - are these reasonable - note: - i opted out of escrow and will pay property taxes at the end of the year myself and will pay home owners insurance myself. The property is about 3500 square feet total

Good Faith Estimate from loan broker:

Processing fee 495

underwriting fee 750

attorney fee 300

escrow waiver fee 276

closing coordination - 390

appraisal fee 525

credit report fee 30

tax service 107

flood certification 7

closing/escrow fee 350

delivery/messenger fee 30

electronic download 30

bank service 10

e-recording fee 12

survey 378

Mortgage recording charge 167

daily interest fee 293

Seller (fannie mae) is paying for both lender and owner title insurance and they are contributing 800 towards closing costs 

Note: Am not "escrowing anything" so i will get insurance on my own as well as pay taxes at the end of the year on my own

Does the above seem reasonable (closing costs)

Also, how does this property look like for a first property. (its relatively new - built in 2007)

Thanks in advance for any feedback

Those closing costs don't seem to bad from my perspective. I imagine you have already looked, but I would check out something like: http://www.bankrate.com/finance/mortgages/closing-...

For Texas it seems normal.

Property seems good. I like multis. The only thing I worry about with your numbers is repair costs. Have you estimate those at all? When you add those to the purchase price, are you still cash flowing?

Whether you decide to pay for repairs with cash or via a loan, it should still be part of the estimate.

Hi,

Sunnyside?  I get chills just thinking about it.   What seems high to me is the cost of the duplex.  That area is really bad.  Are you ready to handle a D class property?

About the loan, all fees are negotiable.  See if you can cut that "closing coordination fee" and maybe some of that processing fee.  The others are from the title company.

Remember you are going to "married" to that property for a long time.  Make sure you are comfortable managing that kind of tenants.

Hope it goes well for you.

I'm jumping into a SFH in a D area. I'm relying on PM, to make this go smoothly.

Thanks for the all the responses folks. @Jorge Rico - yeah Sunnyside is definately a C/D area but I see plenty of duplexes in that area and I see the same property holders (landlords) holding on to them for years. Am thinking I could leverage a Property Manager and I think its manageable. Also, offloading the unit will be easy coz one or two duplexes came on the market in the past few months and they all had a multitude of offers and were gone in weeks.

How do all these owners handle property in "war zones" / D areas? am thinking - Section 8 and a PM or perhaps a combination of both?

Those figures seem about right. I purchased my Duplex back in August. My rental is over in SE Houston. Mine rents for $800 per unit ---tenant pays water and electricity. I was "wowed" with the rent your units are pulling, I wasn't expecting it to be that high in that area.

Are you paying for utilities or is the tenant?

Keep us posted on how it goes. I recall seeing some duplexes in that area - I may have been viewed yours online. With the rents you are getting, I may have to circle back around.

Beat of Luck

Nick

@ Nick - where in SE - South Union? Med Center South? Just curious. My prospective tenants will also pay for utilities. Am still trying to find a good property manager. I won't be in a hurry to just place any tenant. i stick to screening accordingly before accepting a tenant. (including Section 8) and I do intend to accept Section 8 applicants as well  - Any recommendations for a Good PM in South Houston/ Sunnyside areas anyone? or perhaps where to look?

Account Closed - If you haven't read the Section 8 Bible, I would recommend it.  So far I have not chosen to go Sec8 with my triplex in NE Houston given the inspections and other issues associated with the program but I have been tempted.  My only experience with a PM was not one I want to repeat so I handle it myself.  Be patient and don't give up!

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