All Forum Posts by: Bechara Jaoudeh

Thanks a lot guys! I appreciate all the opinions here. I'm still negotiating with the seller....

That's a great idea! Thanks 👍

@Casey Mericle that's definitely the logical conclusion when analysing the properties for cash flow. With that said, what value do I assign to the fact I'd be getting the 2 properties in an affluent area with 0% down and about 50k of built in equity?

This involves 2 properties in a pretty affluent area outside of Philly (King of Prussia). The properties are in perfect shape, fully rehabbed in the last 5 years. The are is very desirable and the fair market value of these 2 homes is around 590K.

The seller is older and getting out of the real estate biz. 

• FMV for both properties together = 590,000
• Purchase Price: 550,000 to 560,000
• Traditional Financing: 412,500 (75%) @ 4.625%
• Seller Financed Amount: 137,500 (25%)
• Interest rate locked 5yrs/5yrs/5yrs at 4%/5%/6% payments would be $1017/$1087/$1160
• Security: 2nd position liens against the properties themselves
• Cash Flow after expenses AND paying the seller's monthly payment = 220/month
• CAP Rate = 7.32%

Yes, I know the seller is crazy to take a 2nd position lien on the properties... He's ok with it!

I'm really struggling to analyse this deal. I typically would not even look at a property that has a 7% CAP (in my focus area). My portfolio is made up of properties in Philadelphia with an average cap around 10%. The question that I keep coming back to is: Given that I'm essentially buying these 2 properties with 0% down, should I accept the 7.32% cap? Furthermore, my cashflow is a tiny 220/month, 1 month of vacancy and I wipe out 2 years worth of profits. Is this a worthwhile risk given the equity and appreciation I'm gaining? Am I analysing this short term but I should be looking long term? What do you guys think???

Letting go my current agent, she is best suited for very basic non-investment transactions. I'm looking for an investor Ninja. Someone who can help me find good investment properties. Knowledge in short sales and foreclosures is a plus.

I'm looking at properties in and around North Wales, PA (10 miles around Zip 19454)

Do you guys know anyone?

Another vote for sell. Very good reasons given above. Good luck!

We started learning about RE investments and rental properties about 6 months ago. We learned a ton but still have a lot to learn. I'm just so glad we found BP. It's great to have such a community of seasoned investors that share their knowledge.

Thank you all for your input! Now that I re-ran the numbers with the 50% rule and the added expenses I can see clearly why this is a bad deal. I'm so glad I posted this thread. I'm calling my realtor now to pull the plug.

Thanks a gain guys! I look forward to engaging more with the BP nation :)

My dilemma is that this deal was good when I was forecasting the numbers based on 10% down on both properties. The only reason it is going bad is because of the 3.5% down FHA loan which is raising the monthly mortgage. Should this investment be punished because I can't come-up with a bigger down payment. Wouldn't it still be good in the long run.

It's in a nicer are. Average household income is approx. 72K

4700/month is total revenue for all 4 units. I'm counting myself as a tenant paying rent. I will only be living there for 1 year.