All Forum Posts by: Christopher Bell

 Thanks man - I’m leaning towards the “don’t do it” side. I haven’t done as much residential and switched to commercial the past year and when presented with this the no money down hooked me a little. But, it is a net negative deal at least for several years with more risk and probably worth!

Where in the Raleigh area are you?

Drew, thanks for the input! They owe the $296k on the townhome. They don't have the money to bring to the table to sell the property. They are starting a family and want to move into a SFH and that's where using my wife to close on a new home would help offset the purchase. My assuming a $400k home (their price range) I could see myself offsetting that negative $300/mo for about 2-2.5 years depending on commission rate.

My gut does say there would be future appreciation and rent growth. The suburb of Raleigh is really growing. But, I’m just trying to be smart about it. 

 Tax and insurance would remain the same - Loan amount is $296k. If they sold with an agent they would walk away with about $280k. My wife is an agent and her getting the commission helping them buy another hose was attracting me because with the commission we get a rental for about the $280k with her commission so more/less below the market value. Plus the commission pads the negative equity for about 2-3 years (assuming 100% vacancy and self managing - which is tight).  

It does seem that the general consensus is that it's likely not a very good idea. There is a lot more risk than reward on this deal it appears. I just like the area, see a future in appreciation here, and thought being able to get an asset for $0.00 down and maybe tlose $300/mo in the long run might pan out in 3-5 years. I'm in a position were earning the 4-5% on the current cash can be utilized to offset that $300/mo loss in cashflow. 

 LTR

 My thought would be to get a townhouse with a 5% interest rate, in the fastest growing county in NC, in the fastest growing town in that county, for no $ out of pocket. 

The benefit is that the area has a ton of growth here and might be a little speculative but there are billion dollar economic expansions happening in the town. 

Also, my wife gets to help them buy a home and recoup about $10-$12k from that.

 Bill,

Definitely should have been more clear with that sentence. There wouldn’t be any realtor commissions on the deal. My thought was going to be to ask them to pay any loan assumption costs. But could ask for some more off. 

You are 100% correct / they did put 0 down when they bought 2 years ago and do t have the room to sell. The area has a ton on economic development going on. The property is 5 minutes from my home and the fastest growing town in the fastest growing county in NC so I think there is future appreciation and increased rents down the road. 

The principal is $386/mo and the loss would be $302/mo

So you don’t think it would be a terrible idea to assume it? I could use the tax write offs too lol

 Bill, sorry no - I would put $0.00 down to assume it. 

Similar priced townhomes are about $300k and would require the 25% down. 

Also, it is a new construction home so likely very low CapEx. I would be self managing so would Buying a job in that aspect

I might be crazy but…..would you?

Scenario: 

Have a chance to assume a loan that has 28 years remaining, 5% interest, and in a very quickly growing suburb of Raleigh NC.

The townhouse would lose approximately $300/mo. Total payment is $2150/mo and market rent is $1850-$1900/mo. 

Loan assumption Is essentially at market value $298k, but the $0 down outside of closing cost on loan assumption are what’s hooking me. I can put 25% down and get a $300k Townhome to cashflow near 0.

Also, the family is looking to buy a SFH and would be using my wife (realtor) to buy. Therefore, we would make about $8000-$12000 in commissions from the purchase.

Am I crazy to be considering this? 

Man just saw this and wish I saw in advance! Hope it’s a great turnout! Would love to join the next!

Would love to attend the next one! I'll be traveling to Florida the 1st Tuesday of February. I'm in the area pretty regularly for work and looking to invest there! Would love to catch another event or plan something to grab brews at Waterline! Look forward to it!