All Forum Posts by: Troy B.

I'm currently in the process of buying my first property and ran into this exact problem. After my 20% down the loan would only be for 37k and not many banks seemed interested in doing my loan. I called local banks and the one I bank with gave me a commercal loan at a 4.25 rate with a 5 year ARM for 15yrs. Not sue if commercal loan in the best route to go, but most banks I spoke with for a conventional loans had a similar rate but wanted 25% down.

A few banks are telling me a home equity would be best route for this small of a loan since I would avoid all the closing costs.

Would this be a good idea or not, since it would use up most of my equity I have in my current home?

Also Just spoke with quicken loans and they won't do it because they said it was considered a high cost loan. Meaning the closing cost would be more then 5% of the loan amount of 34k.

I have spoke with 5 banks now and they all tell me I would have to go with a commercial loan if I'm not living in one of the duplex units. The rate I was quoted was a 15 yrs, 4.99 fixed with rate adjust every 5yrs. No bank would go for over 15yrs.

Every bank told me it would be best to go for a commercial loan or the rate would be even higher and would require 25% down instead of 20%. Is this typical?

I have been reading up on buying investment rentals for awhile but this would be a first investment property. Maybe I was looking at it wrong all along.

I was thinking since the loan was so little, it would be better to pay it off sooner. I guess it would make more sense to pay less mortgage and have more monthly positive cash flow. I will call the bank Monday to look at a 20-30 yr mortgage.

To answer Minh L. The tenants pays water/trash.

The property is about 30 miles from me but in a very good rental market because of resent growth in Pennsylvania natural gas drilling and other factories.

After reading more on this forum this morning, I guess it would be better to get a residential loan for a two unit? I wouldn't want to go over 15yrs because I would like the paid off income for retirement.

Thank everyone. No, the deal would be bank financed. I called my local bank that I have used for banking for years. They told me the average commercial loan for a rental would be 10yrs at 4.9 rate. Is that not good?

I'm looking at buying my first rental and here is the deal I found. It's a two unit duplex that looks to only need cosmetic work for the most part. Only major issue is the electric panel being fuses which I hope to have the owner change before buying. I will do most all maintenance and all managing.

Price: $45,000
Down payment: $8500
Mortgage on 10yr @ 4.9: $380

Tax per yr: 1200
Ins. per yr: 500

Rent per mo: $450 x 2
Owner pays just elec.: $60 per mo.

Thanks for your advice. The figures on this property don't look good using the %50 rule. The only thing is I have looked a tons of rental properties that have sold in my area over the years and if you apply the 50% rule to all of them they all wouldn't work. Yet investors in the area still buy up these rental proprieties like mad.

Rentals go very fast in this area but rent on a two BR unit only averages $450 to $500. How can I get into investment rentals if they all won't pass this 50% rule here in north western Pennsylvania?

I have been looking and studying up on buying investment rentals for a few years but have yet to get the nerve to jump in. I looked at a property the other day and I think it could make a decent investment.

It is a brick flat roof duplex and a single family home both on one lot. Both are in good shape and appears to need very little immediate work. All units are now rented and renters pay all utilities. The property is five blocks from my house so I would self manage the property. Here are the details in case anyone can give me their opinions on this deal.

Price: 98,500 (would offer 95,000)
Taxes: $2200
Monthly rent totals: $1260 month

I contacted my bank for a commercial loan and they gave me a rate of 4.7 on a 15yr. loan, fixed for 5yrs and adjusts at current rate. With 20% down.

Under my current calculations with loan, taxes, insurance and around $2000 in yearly expenses it should leave me with around $900 cash flow and 8.33% cash on cash. If I went with 20yr these figures would be much better but at 38 yrs old and wanting to have it as a retirement I'm not sure I should go above a 15 yr loan. Any thoughts on this deal would be greatly appreciated.