All Forum Posts by: John West

@Account Closed I agree. I’m more less curious if what they’re doing is illegal. 

... its probably a rat, I know, but I want to know if the offer I have received is legally possible.

I want to sell a property to a tenant, but he doesn't have much for a down payment. He has contacted every lender/realtor in the state I think trying to finance this property. A realtor called me today to make me an offer. According to the realtor, this transaction has been approved by the hard money lender and title company already.

I have set a firm price at $100k, which is a good deal for the buyer, but I'd like the quick sale.

Here comes the sketchy part: They would like me to accept payment of $125k with $25k being commission for the realtor, which the realtor is then going to use to pay the down payment. 

Is this even legal?

Find out what excites you. There are a hundred different ways to invest. I would start with listening to the podcasts. They are a great source for inspiration. You’ll start catching on to the lingo fast and get excited to start.

That does sound a bit high, but not by too much. Search craigslist or use rentometer.com to get an idea of what rent in the area is going for. 

Have you calculated for repairs? For capital expenditures (big ticket items like the furnace/roof failing)? For electricity? Vacancy?.....

I see you’re a pro member. Use the calculators here on BP. That will help make sure you don’t miss anything.

It all depends on your lender. To give you a short and quick answer, yes. Likely after only one year the balance on the mortgage will count as debt and you haven’t had the income long enough for it to count toward the income portion of that ratio. My understanding is that it’s like getting a new job. Somewhere around 2 years most banks will start counting the income from rentals toward that ratio. There isn’t anything that says you can’t have two mortgages. As long as you can convince your lender that the first place is self supporting and you’re actually making money on it, they’ll give you another. Sit down and interview a few lenders. Explain your situation and see who is willing to work with you.

I'm buying it in Augusta.

I used auction.com to buy a property. My lender let me turn around and borrow 120% of what I paid for it because it appraised for so much. There are still some good deals on that site. You just have to be patient and check regularly.

My bank has offered to do this for me. Everyone will tell you - call around, find a small local lender. The more you work with a small portfolio lender, the more flexible they become.

@Carl Hebert  and @Andy H. I have a partner with significant assets so we formed an LLC to protect those. Just starting the partnership, having only a year under my belt, and requiring a commercial loan, my interest rate is 5.75 and the max amortization is 20 years on a commercial loan.

While I didn't purchase this property, I have found another quad that I'm closing on in about 3 weeks.

Brandon Turner has an analyzing method he uses called the “4 square method”. I recreated it in an excel document and it helps me make sure I have considered all possible expenses (trash, water, sewer, repairs, capital expenditures, taxes... etc.) Here is a link to his YouTube video: https://m.youtube.com/watch?v=T_7vhsSBi7c It’s hard to say without knowing more numbers better, but those margins look quite slim. A lot of people use the 1% rule as a good starting point. Try to get 1% of purchase price in rental income each month. This rule would suggest it MIGHT be a good deal if you purchased the property for $150,000.