All Forum Posts by: Frank Zareski

Hello, 

I was hoping to get some help on a deal. My parents are going to sell their home to me for 220K. It is worth approx. 285K. Ultimately I plan on renting this out and can go about the financing in one of two ways. 

1.) Use a gift of equity as 20% down payment and come out of pocket for closing costs only. This would leave a tight profit margin on rent and at the current interest rate I would net 200-300 dollars a month after mortgage, HOA, Taxes, Insurance. This does not factor in vacancy (which is low in this particular area) or repairs. This would leave a nice cash reserve and money for another property.

2.) Come out of pocket and put 20% down plus closing costs on 220K and net approx. $450 - 550 a month. This would leave less of a cash reserve and more cash locked up in the property but greater cashflow and equity. 

Happy to give more details if necessary but was hoping to get thoughts from more experienced folks.