General Real Estate Investing

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Patrick Torres
  • Rental Property Investor
  • Albuquerque, NM
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30 Year Amortization In 2?

Patrick Torres
  • Rental Property Investor
  • Albuquerque, NM
Posted Dec 5 2019, 17:46

I’m looking at fourplex that is priced at $145k. The owner will finance with $15k down, 2-year call, 8.5% 30 years amortized. I put that into an amortization calculator and it looked like the payoff for the original loan of $130,000 would be $359,852. Am I correct in the way I am looking at this? If so, this property would never appraise for anywhere near that amount when the 2 year call ended, so why would anyone do this? I feel like I must be missing something, or this person might be intentionally trying to trap someone inexperienced.

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Tim Herman
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Tim Herman
Replied Dec 5 2019, 17:54

@Patrick Torres I don't think you understand how a financial calculator works. 130k @8.5% 30 year amortization and call on month 25 is $127854.27. Print the amortization schedule. and look at month 25.

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Patrick Torres
  • Rental Property Investor
  • Albuquerque, NM
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Patrick Torres
  • Rental Property Investor
  • Albuquerque, NM
Replied Dec 5 2019, 18:04

@Tim Herman

I did not understand how the draw worked, thank you Tim.

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Joe Villeneuve#1 Innovative Strategies Contributor
  • Plymouth, MI
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Joe Villeneuve#1 Innovative Strategies Contributor
  • Plymouth, MI
Replied Dec 5 2019, 18:50

Your missing the fact that your tenants are making all the payments for you, so all you are spending is the down payment