Louisville, KY investors is this a deal?
I have a 2 bed 1 bath 850 sq ft house under contract in Shively 40216.
Purchase price of $50,000 and an appraisal of $74,000 (67.5% LTV) . The house needs minor cosmetic upgrades but is practically rent ready. I also have a renter lined up.
For rent I believe I could get $650 pretty easily based on rentometer and craigslist posts. PITI on a 30 yr fixed load will be around $330.
Follow up question: what would a typical hard money/ private money loan on deal like this look like in our area?
I am working with my bank to finance the deal and am wondering if hard money/ private money may be a better option since I am having to do some creative things for the down payment.
@Tyler Bodi 40216 is a big area and depending on where you are at in the 40216 this may be a fair deal or a not so good deal. I personally like PRP better than Shively. If you are north of the Watterson the property values are a little lower and the rent a little lower. If the appraised value is $74k I would like to be all in at roughly $50k. That's all in meaning any repairs done and ready to rent.
You should get a better rate and term from your bank. Hard money will be a little pricey but if this is a deal then it may be a good way to get into the deal and then look for some better financing later.
Hope that helps.
I don't know what kind of 'creative' things you are doing but you are usually better off with the bank loan. I assume you are using a portfolio lender (e.g. local bank that will hold the loan)? The small banks are usually the best choice. Hard money is a useful tool but it's almost always the most expensive option. Sorry I can't be more specific on the numbers. Each lender will be different and you will be treated differently based on your experience, collateral, and relationship with them. Mr. Money & Surepoint Equity are two local HM lenders. You can google them and get a quote.
$650/month for the house you described seems to be too low in my opinion. If you can get the rent up, it seems to be a good deal.
@Jason James yes, thanks for the input!. The property is right off the Waterson to the North and after visiting the property a few times and driving the neighborhood it looks like a good opportunity. All I will need to do is some clean up and and paint. I am DIY guy so I should be able to keep the costs low.
@Brett K. I am using a local community bank that I used for my primary residence. They need 20% and 6 months reserves. I have cash that I've saved but cannot use because I have not kept it in the bank so I am paying off my car with that and then taking a new loan out against to show history of the money and then I am taking a loan against my 401k to cover the rest. I was inquiring about the hard money as a quicker potentially easier way to get into it and then refinance out. This will be my first rental property. Thanks for commenting!
@Pavel Reyes Valdes I believe I will be able to raise the rents some. The tenants I have lined up have agreed to pay more. I posted the $650 conservatively since I knew people were paying that in the area.