All Forum Posts by: Brandon Ribeiro

@Brandon Ribeiro good on you for looking at this option in the first place.

Personally, if finances are tight that you don't have the cash to put 3.5% down plus closing costs, my opinion is you are not yet ready to purchase. This may be an unpopular opinion on a real estate forum (especially given that two other agents posted before me), but you always want to have cash reserves for life's surprises. Negotiate from a position of financial strength!

Now, different story if you are saying your dedicated real estate purchase funds can't swing 3.5%+closing costs without dipping into your emergency fund. That's where Seller's assist can help as Bill and Jim have mentioned. Essentially the seller agrees that $X will come out of their check at closing and go to cover your closing costs at closing (debit Seller, credit buyer). As far as inflating the price and asking for an equal amount of seller's assist in return, keep in mind the house has to appraise for the inflated purchase price. Anecdotally I have had lenders tell me outright that FHA lending guidelines frown upon this practice more than a conventional loan.

A lot of lenders do have 3-5% down conventional loan programs too, so definitely weigh the options and the costs...as well as the potential future tax implications of the decision.

Ask your agent and your lender to run a closing cost estimate for the different scenarios before you offer. If you need any help feel free to shoot me a message.

My advice: don't buy it.

You're trying to spend every penny you've got to put this deal together and then you won't have any money to deal with the little surprises life throws at us.

Every property I've purchased had a surprise maintenance issue that cost me thousands within the first few months. My first investment cost me $6,500 to buy and then $10,000 in repairs in the first three months (I got half of it back from insurance but it took a couple months). My next property required $8,000 for a new roof right after purchase. Next property was an unexpected $5,500 for a furnace and duct work. Next one was 11-units with four vacancies right after closing, three of those units required renovation, two furnaces needed to be replaced, and I spent almost $4,000 on plumbing in the first six months.

I read from other investors experiencing the same thing. They buy the property and then get hit with unexpected expenses within the first few months. You need to be able to purchase the property and have a reserve to handle what life throws at you. If you spend every dime just to get the deal, the entire thing could fall apart when you get hit with a major expense.

Do you have a 401k? You could take a loan from it.