My father and I started looking at several properties in the Bronx in order to get our feet wet and learn as much as possible about our area before investing. Having my Real Estate licence has allowed me look at and analyzed many different homes, but now we have found a deal too good to pass up. Because we where not expecting to get in so soon, we are not financially prepared or meet bank requirements for a loan due to job history or cash income. I am hoping that some one can give me some advice to how to buy a $370,000 multi family home that rents for $4950 per month and potential for more.
Here are some additional details... In addition to my real estate income I work at Sleepys (mattress store) which brings me to about $75,000 per year, but because my job is commission based I need to show 2 years of consistent employment in order for the banks to consider my income which leaves me in a tough spot for a loan. My father in the other hand, has over 15 years in his position and makes about $52,000 per year, but his tax returns reflect too many expenses in his business which leaves him with an income too low to qualify for the necessary amount. So, we have been thinking about trying to get private money or hard money to buy this home until we can refinance it later with a bank. By the way both of our credits are well above 700 and we will be getting some cash in the next couple of month with will allow us to pay up to 50% of the property value. I know that if we put down 50% it will be much easier to get the refinance later, but there is so much competition in the Bronx for multi family that I am worried we may loose the opportunity. Can anyone offer any advice?
@Andy Perez Have you looked into an FHA loan? It only requires 3.5% down. Also, they may count some of the expected rental income from the property towards your regular income. Where is the property located and how much work does it need? I'm guessing it's a 3 family house?
the money is not the problem. We have the money, but it's currently in our home country which we are getting soon. The problem is actually getting financing. My dad only reports about 20k per year in his income taxes and I've worked my w2 job for only 1.5 years. As its a commission based job the bank is asking for at least 2 years continuous employment to consider me mortgage worthy.
I was thinking about taking the route of a hard money lender for several months until we have get the cash in a couple of months. I am not sure about how to get hard money or even if there is any other option that is not so expensive.
Finally, the best part is that the property needs very little work, maybe 5000 at most of that. In addition the home has 3 large units but the C/O states it's a 2 family located in the Bronx.
Congratulations, Andy, on thinking big (not single family). Several questions come to mind:
1. What makes it "too good to pass up"? 2. Would it be a better deal for $320,000? 3. Have you asked the seller for: financials, seller financing (50-100%), assumable 1st mortgage, recent appraisal? 4. Remember-in real estate, leverage usually means greater profit. If you have $150,000, that could be $50,000 down on 3 properties-better? 5. Have you contacted several private lenders-found at local real estate investment associations? 6. Have you used the "property analysis" tool on this site to analyze this and one or two other properties for sale locally? 7. What is your exit strategy? How are you going to raise your ROI? 8. Are you going to close on the 28th (end of month) so you collect the next month's full rent? 9. What have similar properties actually sold for recently (last 6 months)? 10. Do you have a contractor's estimate on the actual repair costs?
If it is a really active market, there should be several good deals around.
Hope this helps-James