What is the existing financing? Amt, type, how old is the note, etc. This comes into play as to what "quality" the financing is on sub2, wrap or lease option assignment. What I look for: • Neighborhood • Quiet street • Condition of property • Debt Against - Note - Pmt, interest rate, date purchased, bal, fixed vs arm, etc. • Floorplan desirability • Attitude of Seller - Willing to help the Buyer Buy the place?

Generally, I want to know the details of a property before I invest a lot of time analyzing it. The first thing I look at is the motivation level of the seller. If this is an MLS listing and the seller is firm on the 70k and want sell outright, I wouldn't look at it. @Brian Gibbons brought up a good point about getting the mortgage details. This will help you determine the motivation level of the seller. If he won't give them up he's selling retail (not that there is anything wrong with that). I would call the seller and get the mortgage details. A question I like to ask on any call is: "What will happen if you don't sell this property?". Let me know how it works out ;)

First, If I use the 50% expense ratio I get a cap rate of about 8.1%. Since I want 3 percentage points above my cost of money I don't want to pay more than 5.1%. Generally, you can get a better price if you pay cash or even if you use a mortgage. The mortgage is going to cost you something up front + you and the property have to qualify. With seller financing or subject-to deal you will pay the highest price. Also, get a handle on the deferred maintenance. Good Luck. Bill

Updated over 11 years ago on 06/11/2014. Most recent reply

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Ryan NovakPoster

Real Estate Investor
Garland, TX

Real Estate Deal Analysis & Advice

Deal quality?

Ryan NovakPoster

Real Estate Investor
Garland, TX

Posted June 10, 2014 17:46

I'm looking to purchase this single family home for a potential rental property. The owner is relocating and he currently has renters occupying the property. He's asking for 70k and comps are in the higher 70's. He says there are minor repairs needed but I haven't seen the place. The renters are paying $950/month and I'm guessing the mortgage payments will be around $400/month. It sounds like some good cash flow, but I'm wondering how I should finance it? A 30 year fixed rate? Owner financing? The owner has a 30k mortgage left on it. Any advice is much appreciated! Ryan

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