All Forum Posts by: Rick Park

@Dana Whicker Thank you for the quick reply. I appreciate that.

sellfer financed. Maybe this is just a non-issue.. but if i buy a property that is worth X, but i want to include some equipment (tractor, mower, trailer) in the purchase for Y. So the total loan is for X + Y=Z. will the town look at the loan price of Z, or will they somehow know that the actual property is only worth X? is there a better way to structure the loan?

Thank you in advance for the advice. 

@John Warren I had never heard of a portfolio loan. That seems like a very interesting idea. i will contact some local banks to discuss this possibility. Thank you for this different approach.

@Marcus Auerbach i just tried running the 7/25 through my excel sheet, and i like where that is going. thank you for that input.

@Joe Villeneuve I first determined my budget for the downpayment as well as what i need the net monthly income to be after expenses/debts, then i created an excel spreadsheet to run all the different variations of the loan. My initial offer was very good based on all of the metrics i used (ROI,CAP,GRM), this allowed me to be extremely confident that i am not overpaying for the property based on the income. It also allowed to me feel confident in the negotiation that i knew would be happening.

Duplex next to good college that rents 8 rooms to varsity athletes. since 2007 there have been no vacancies and no serious issues with tennants. Year lease, quarterly collection. house was purchased for $170,000 in 2007. Seller has significantly improved property. new appliances, roof, pole barn, bathrooms. Im in Northeast PA where house prices don't really improve much.

Income - $440/student x 8 students = $3,520/mo

Expenses - $500/mo for taxes and other expenditures. Tennants pay utilities.

Net income $3,020/mo

seller told me to take a look at the rent and make him an offer.

My offer:

$250,000 purchase price

$20,000 down

4.5% interest

20yr ammoratization

5yr balloon

His response:

$269,900 price

$20,000 down

4.89%

20yr amm./5yr ballon

I'm having it appraised today. I'm worried that it's going to come in below what my payout would be at the 5yr balloon payment, which means i would have to come up with the difference, as well as the 25% down for the 2nd mortgage. OR, what also has me concerned is if i create terms that would put my 5yr payout at whatever the appraisal comes back with, but then what happens if theres a downturn in the market and the house is no longer worth what my payout amount is?

Am i totally nuts for thinking its ok to overpay for this house? The way i see it, i am treating the property as a business, which is what i'm purchasing.. the structure is just a piece of it.

Anyone been in a similar situation?

Thank you!