More money down or lower monthly payment??
I am currently looking at a purchasing a 4 unit Multi-Family to rent out. It has 15 bedrooms and 8 bathrooms and has a rental history of $5600-$5800 a month for all four units.
Say I purchase the property for $500,000, I have two options. 30 year fixed with 25% down or 30 year FHA with 3.5% down
I could put the 25% percent down ($125,000), thus decreasing my monthly payment to about $3,000 a month. I would also have to borrow that $125,000 from a private lender, thus being an extra $1,000 a month to pay him back for another 12 years (125,000 x .20% interest = $145,000. I would pay him $1,000 a month thus ($145,000 / $1,000 / 12 = 12.08 years)
or
Get an FHA loan which only requires 3.5% down which would be all i would have to come up with is about $17,500 for just the down payment. I wouldn't have to get a private lender, however, my monthly payment jumps up to a little over $4,000 ($4,050.00) So now i have lost $1,000 a month in cash flow but I have saved over $100,000 as my initial investment. This option seems like the smarter way, however, i wanted to gather your thoughts and see if anybody could give me some other ides, options, or opinions.
Also, two of the units were built in 1917 and the other 2 were added on in 2000. Do you think the units from 1917 will depreciate? It is too risky to buy something that old?