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Real Estate Deal Analysis & Advice

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Zach Davis
  • Investor
  • Portland, OR
105
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143
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Would you do this deal?

Zach Davis
  • Investor
  • Portland, OR
Posted Feb 19 2015, 22:04

I was recently contacted by the owner of the duplex across the street from mine, he's sick of it and wants to sell it to me owner contract. The asking price is about 15k under market and the terms are 10% down payment and 5.25% interest amortized over 30 years with a 7 year balloon. I don't currently have quite enough cash to put a full 20% down otherwise I would just buy it through a bank and take the lower interest rate. My thought was that I could buy it owner contract and refi it in a year or two. Obviously, other than not knowing what interest rates or property values will do in the next 7 years, the property will barely cash flow until updates are made and rents increased. It has the potential to net around 15% cash on cash IF I can refi it at around current market rates in a year or two, if not, it’ll be more like 6% (which, sadly, is pretty standard for the area) until inflation pushes rents up.

Would you bet on this thing?

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