I am in the middle of a deal right now I was hoping I could get some insight on the best way to structure it. My friend and I are looking to go into buying a townhouse together from a lady that wants to release it back from us. We are going in at 355K and she is willing to pay 2500 in rent. Based on how much she can pay in rent with a 4.5% interest rate what would be the best way to structure our downpayment. Put enough so rent covers mortgage or put more down to cash flow, 30 year mortgage or 15 year with more?? Thank you.
Tough to right all the details out but let me know if you have any questions, much appreciated
@Dominic Battezzato Chances are if its a rental property you may have to amortize the loan over 20 years especially if you buy it in an entity. Before you rent back to her make sure she is well qualified. You just never know if she is going to be able to pay the rent. I have seen it all and when I put my guard down thats when I get bit. In most cases the bank will want 20% down so your mortgage will be around $280k and over 20 years thats around $1800 a month off the top of my head. plus account for a 6% vacancy rate and $2400 a year in repairs and calculate how much the HOA fees are and insurance and the real estate taxes. Sounds like to me you will be lucky to lose a little bit of money each month. Just make sure you run all the real numbers so you can make a good decision.
Does this even cash flow? Well below 1% rule.
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