12 Property Transaction
Investor Profile: Investor in Baltimore’s low income row homes. These home are traditional brick, 2-3 bed, 1 bath, 900-1000 sqft, built between 1950-1970, and rent between $900-$1100 / month. I focus on neighborhoods on the outskirts of the city that are less dangerous and strive for the 2% rule.
Financial Profile:
- Software engineer day job
- Near 800 credit
- Primary residence
- $230k loan, $60k equity
- $1600 month mortgage
- $1200 month roommate income
- Single investment property
- $950 month rental income
- $250 month cash flow after mortgage and management fees
- $30k loan, $60k equity
- $100k Retirement account
- $30k personal cash
Deal:
- Investor seller (moving out of area)
- 12 homes fitting my profile in single neighborhood
- 100% occupancy, 75% section 8
- each rent $1000-$1100 a month
- asking $60k each, neighborhood retail is $40k-$70k depending on condition
- Seller is introducing me to his portfolio lender
- Seller is offering second lean to help qualify the loan
Concerns: I will be meeting with the seller and his lender on Monday. This meeting is to make sure I can qualify for a loan before proceeding to inspect the properties. Assuming that these homes have been maintained, I see many pros and cons to this deal and would love to receive advice / opinions from some more seasoned investors.
For me the financing would need to be enough to cover both loans, pay a manager, and still cashflow enough to build a vacancy/maintenance reserve. It would also require for me to not put down all of my cash and instead leverage equity.
Pros:
- Turnkey properties, less risk in the beginning
- Familiar lender and opportunity for creative financing
- Large transaction - quickly and significantly increase my portfolio size
Cons:
- Jumping from one investment property to 12 may be too risky
- No forced equity