All Forum Posts by: David Bowles

@Jonathan R McLaughlin I had originally been speaking with the seller to do 30k down cash then pay him back over (terms TBD). He then mentioned he would be ok with me getting financing for it. I only currently have about 45K saved, so I felt that my potential risk was lower going with a traditional loan. At least this way, I still have the cash in my pocket to pay the loan down if I choose. Does that make sense?

Just checked a different website and it had the 215! Very strange, I will definitely confirm with the lender when I speak with her today!

@Joe P. Just checked on bankrate.com and I see the 269 there as well! Perhaps I typed something wrong in my analysis.

I’ll be doing the walkthrough tomorrow, so we will see how that goes.

@Joe P. Sorry the mention didn’t work on my post. I’m still trying to figure out whether to use the phone app, or the computer. Both seem to have their quirks!

@Joe P. I will do my best to address everything in your reply. Thank you so much for your time on this!!! The seller has agreed to sell me the house at 45K. Current MARKET Value is 60K based on similar comps (fully rehabbed, beautiful comp houses within 1 mile sold for up to 90K in 2019.) I have been referring to this as ARV previously, but it is actually current market value. I am looking to do a 60K loan at 20% down and have the seller give me back 15K at closing. (as he only wants 45) The analysis looks like this using the BP calculator. I have also verified tax/ins costs on the house. I am assuming 7% vacancy and 10% maintenance/capex. Purchase Price: $60,000.00 Purchase Closing Costs: $1,000.00 (paid by me to my REA friend, also an investor, to help me through the process) Estimated Repair Costs: $0.00 (this is assuming the tenant stays. I haven't seen the property yet, nor met the tenant, so I left this at 0 for) Current Market Value $60,000.00 Property Description: Nice cottage with 2 bed, 1 bath. Comes with (small private lake) Lake priveleges. Down Payment: $12,000.00 Loan Amount: $48,000.00 Loan Points: $1,680.00 (assuming I want the 3.5% rate at 3.5 points. I'm inquiring as to how many points a higher rate would be to reduce my up front capital investment) Loan Fees:$ 5,000.00 (based on an estimate from the lender) Amortized Over: 30 years Loan Interest Rate: 3.500% Rent: 650.00 (7800 yearly income) Expenses: Vacancy $45.50 (7%) Repairs $32.50 (5%) CapEx $32.50 (5%) Insurance $67.00 (10%) P&I $215.54 (33%) Property Taxes $58.33 (9%) Total $451.37 (69%) Total Monthly Cashflow ~200.00 So in my opinion, closing looks like this. I bring 19K to the table. Seller gives me 15K back. I end up only having about 4K into the deal. I also have 48K loan on a property currently worth 60K leaving about 12K in equity. Should I keep the tenant, cashflow should be around 200 per month. The way I see it, with only 4K into the deal, my cash on cash ROI is insanely high (2400/4000=60%). I also plan to set aside 10K in a reserves account for the property leaving me with about 40-45K in my own personal savings. I know this was a lot to look at, but being able to get valuable opinions back from everyone on this thread is worth it's weight in gold to me! I just want to make sure I'm not making a decision I regret! I still have not made an offer on the property yet, so it's not too late! I also don't want to be the guy on the sidelines that never buys a house because "it's too risky". Is there a happy medium?

@Curtis Mears Thanks for your response! I do intend to ask for proof of payment. If that is not provided, I plan to have her removed by closing. We will see how that goes!

Should I purchase the property, I’d inherit a total of 900 dollars. One month rent at 650 and a 250 per deposit (she has a tiny lap dog from my understanding. I’ll find out for sure tomorrow when I tour inside the property.

Thanks again for your advice!

@Sue K. Lots of good info here! I’d love to speak with you on the side if you have some time available. I’ll be sending you a DM shortly!

I mean “What if......” fears. Sorry for the typo.

@Michael Noto Thanks for your response! My original thought was that I’d be kind of a jerk to make her move due to my own “what of fears”. The current owner a very close friend to my real estate friend. He also owns a business very near me, so I really don’t expect to be ghosted by him. Do you really think it best to have current tenant gone when I buy? Looking at area rents just yesterday, I could probably get 750 for rent (current 650).

The seller did tell me he would have her vacate if that’s what I wanted. Maybe I should just do that and start fresh in my first house......

@Sue K. thanks for the reply Sue! I am hoping that by asking the seller for detailed payment history (thinking last 6 months is good enough, what do you think?), I will be able to have a clearer picture of the situation. I am not trusting enough to take someone’s word for it when it comes to my money!

At this point today, if I decide to keep the tenant, I would have her sign a month to month rental agreement I think. At least that would allow me have my terms made VERY clear to her up front. I was originally leaning towards keeping her, but after this thread, I’m 50/50 LOL!

As far as the condition of the property, I should have a better idea of how well the property is taken care of on Tuesday when I walkthrough. I also plan to pay for an outside inspection at that point should I decide to move forward.

I’m very curious as to your comment “the terms don’t sound good at all.” What about them is not to your liking? As a RE newb, all I can do to analyze is look at the numbers and use spreadsheets like the BP one, and it looks good from that aspect. I definitely hear your advice here, and will keep it all in mind while making my decision!