I am thinking about doing a 2 property deal tomorrow and would like to hear what you think about it. The properties are in extremly desireable areas of the Phoenix metro area(3,000 sqft. in Chandler & 1700 sqft. in Gilbert). Chandler property is a sale price of $515,000 and the Gilbert property is a sale price of $360,000. I will get a total of $65,000 back at the close of both properties. I will live in one and rent the other out. I plan to use the money to do a couple of rehab projects. I can borrow from hard money and use my 65,000 to do the repairs. These type of projects are hard to find but still can make $10,000- $15,000 profit off of each. Also I want to invest in some pre-construction projects but will have to make some quick cash first to pay my 2 huge mortgages. My problem is I am scared to do this deal. What if it goes wrong? I have never even owned a home before. I am young and have never invested money in anything. I make decent money but not enough to cover this mortgage for to long if my plan does not work out. I do know a good deal about real estate, I am a mortgage broker with a background in construction. I think this will all work out but like I said I am afraid to think what will happen if it don’t. Please give me any words of wisdom you may have. Thanks from th bottom of my heart.
How are you getting $65k back at close? No HML in their right mind is going to let you walk away with cash at close. Also, what are the retail prices on these homes if you are able to get HML money for them?
Also, why are you looking into precon investing in Phoenix…last I heard a lot of people got burned bigtime doing precon investing in that market. Sounds like you’re dreams might be out of tune with reality but I could be wrong.
What I am wondering is how you are qualifying for almost 900K of financing. Just the fact that you are getting cash back at closing throws up a red flag to me. Why on earth are you using hard money to purchase an owner-occupied home? Even at 100% financing your rate will be nowhere close to what an HML is going to charge you. The 10-15K profit you will be earning will be gone in two to three months if you have to come out of pocket AT ALL on these deals. As Rich was asking… what are the current appraised values of the properties? Based on the numbers you have provided including the cash back and basing it off the fact that your HML will go to 70% these properties should appraise for a total combined value of $1,342,857.00. Which does not add up to 10-15K. Somebody somewhere is making money off this deal I am just not sure if it is you. Please give us more details.
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