Made My First Offer
It wasn't excepted but I feel it's a success. I've spent the last year or so getting ready to invest reading books saving money etc. My question for those of you that are experienced investors is would it have been has a good deal? Here's how the numbers broke down.
List Price: $235,000
Single Family property that is a legal duplex. Two kitchens two water heaters two electric set ups and one furnace.
Rent for the current tenants is at 2300 with a lease expiring in August. My realtor and I figured it needed about 35,000 to turn it from a four bedroom one unit to a 2 unit that had three bedrooms and two bedrooms. The rent after renovations that would take place in August would be around $3000. About a mile from the college.
I had the money approved for financin. about $25k in cash and $70k approved for a HELOC that could be used for the down payment and or construction.
I offered list price and asked for 3% closing costs their realtor said that there were several offers that day and they needed final and best by 6 PM. I came back with an offer of 242,500 with no help in closing costs. I found out the next day that I had made a high enough offer.
My nervousness was that I was highly leveraged using a HELOC for a down payment partially. The terms of the HELOC are 5% five-year with .5 points. Interest-only option.
After rehab I was $270k in with about $3k in rent so this passes the 1% rule but would I be making a mistake by being this leveraged on my first property. There aren't many duplexes in my market that are listed at this price most are higher and the ones that are lower would be mostly a cash flow play.
Thanks!