Whats the best way to fund this deal?

Question

I was presented with this offer and would like some input. It is my first property and will help me jumpstart my investing career.

It's a duplex in Stockton, CA.

The property is valued at $280k

The owner is willing to selling it to me for $250k

The owner wants $100k and will carry the paper on the remaining $150k @ 3% for 15years with interests only payments ($375)

Current Expenses:

Property Taxes    $1330           Yearly    San Joaquin County

Dwelling Insurance    $976    Yearly

Water            $130 - $160        Monthly    California Water

Sewer & Garbage    $130        Monthly    City of Stockton

Self Cert Mnt Insptn    $205    Every 5 yrs    City of Stockton

Front Yard Mowing    $45        Monthly    Parra Landscaping

Total Yearly Expenses    $6,126   Yearly

Monthly ($515)

Total Income        $19,200  Yearly

Monthly ($1600)

Rents are $800 per unit, both units have long term tenants in place, but the market in that area is $1100 for a 2Bd/2Bath.

I would like to know from some people who have more experience if this sounds like a good deal as well as ways to come up with funding.

What are some ways I could get the $100k?

My plan is to get it cashed out refinanced within a year or year and a half and hopefully have money left over to BRRRR into another property and continue the train.

Thanks for any input and recommendations. I appreciate it.

Tom S. · Answer

@CJ S. It doesn't seem like a great deal if you have to put down $100k on a $250k property (especially since it doesn't seem like you have the $100k).  Using a conventional investment loan of 25% down, you'd only have to come up with $62k down.

If you are going to proceed, options include taking on partners for the $100k, friends or family, savings, 401k loan to name a few.

Good luck!

- Tom

CJ S. · Answer

Property management will be held by the current owner, who has self-managed since they bought the property back in 1987. I do need to update my number to reflect those additional charges.

Thank you for the input

Kyle J. · Answer

It’s not often you see someone from North Carolina looking to buy across the country in a relatively high cost state like California. But since that appears to be the case, how come you haven’t factored in property management, repairs, CapEx, vacancy, etc into your numbers? Surely you’ll have those expenses (probably on the higher side too given that you’re trying to manage remotely).