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Author Topic: How does this deal look?  (Read 6933 times)

Offline aak5454

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Re: How does this deal look?
« Reply #15 on: January 24, 2008, 07:41:25 pm »


Concerning the mortgage, the property will appraise for somewhere in the neighborhood of $110k to $115k on the conservative side. With that said, should a 10k down payment plus the "equity" that is in it, I should be under the 80% LTV. Correct me if I am wrong, but that would require no PMI.


It does not work that way.  The LTV is calculated based upon price for purchase money loans.  For refi's it based upon apprasials

Beside, the apprasiers usually just "hit the mark" (i.e. it will come in just over purchase price). 

I would aks the seller for his past 2 yr of operating expenses from his Sch E.  You may or may not get them.

In the end, you have to define your objective.  If you are looking for immediate cash flow producing income that requires no effort, this is the wrong property.  As a long term hold given what you said about the desirability of the area, it might be the right deal for you.  Rental properties come in all shapes and size which equate to a spectrum of a investment returns ranging from pure appreciation (i.e. you are huge cash negative) to heavy positive cash flow (but appreciation is usually very minimal if negative if you factor in inflation).  There are exception to this, but in general it seem to be true across the country from my experience of buying and viewing properties in multiple states.  This property appears that to fall in the middle which means it can be breakeven or a little positive with some effort on yoru part and appears to a have some reasonable potential for equity appreciation.

 




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