Purchasing multi family home for cash. Is it risky?

4 Replies

Hello everyone, I am seeking my first investment property and I came across a listing that looks like it could have good returns, however am weary this could be a money trap. Does it raise a red flag when a seller wants a cash deal on a house? The house is listed for 39k and it’s a 3bed by 3 bed duplex. Any insight would be appreciated. Thanks in advance,

@Matt Kistner It should raise a red flag when it’s $39K :) But, seriously, odds are it will be incredibly difficult to get a mortgage on a $39K property. Most banks have mortgage minimums so it basically reduced the buyer-pool to cash-buyer-investors. Have you talked to a bank about giving you a loan on a $39K property? If you haven’t...make a few calls...

If you’ve found a duplex for 39k I’d say your rehab would be fairly substantial.  I would set up for a contractor to do a scope of work with you or at least have an inspector walk the property.  Usually a bank won’t lend on that low of a purchase unless you can do a commercial loan or line of credit.  If you have to buy with cash I’d make sure you have the funding for a rehab as well.  I feel I live in a moderate area and to find a true duplex like you stated vs a converted the asking prices are usually 150k-200k which would bring in 1000-1200/ month rents per side.  Hopefully this helps and best of luck.

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