Possible Deal, What Would You DO

[Shane Caraway]

I live in rural NW Iowa. When I moved out here I found that rentals are very scarce. I came across a house that is selling for $43,000. I don't have enough cash to make buy an investment property with 30% down, but the owner is considering financing the 30% for 4 years no interest at $270/mo. This would put me at a mortgage payment of $150 -200/mo. for the  remainder.

Breakdown looks like this in my little mind.

Owner $270

Bank $175

Taxes $50

Insurance $100

20% Incidental/profit $120

Rent for $750

There would be 0 money out of pocket except the closing costs that would be minimal due to financing with local bank with original owner. Owner has been told the deal could be done by the bank for around $1000.

The first 4 years are about breakeven, but the profit margin really opens up after that.