Hello all,
I think I have gotten lucky, I have a tenant ready to sign a two year lease for 1200 a month, now I just need to find them a property…
I am going looking at two of them tonight. I just need your advice on how to structure this deal.
I am thinking about putting 20% down to bring down the PITI, I know that I am getting between 25-30% equity in the home when I buy it.
My exit strategy is to lease to them for two years and then (if lease is not extended) fix up and sell at retail.
So, for financing, what is better
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Get a ARM loan for 5 years interest only
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Get a regular 30 year mortgage and deal with prepayment penalties (if they happen)
Any suggestions on other alternatives are welcome…
Most 30 year loans won’t have a prepayment penalty. If you are putting 20% down, you shouldn’t have that problem.
Thanks Stevie-O, any other alternatives that I should be looking for?
The 7/1 ARM has better rates. A regular 30 year is going to have great rates as well. The only difference is that the interest only hit on a fixed rate loan is 1.5% instead of .25% like it is on the ARM. Stveie-o is correct there are no pre-payment penalties. Especially if you are putting down 20%. What area are you looking in DFW? There are plenty of good deals up in the East Plano area that will cash flow with rent at 1200.00 per month.
Thanks Cristopher, yes, this is in east Plano 
How did you know??
Noob,
I am familiar with entire metroplex in terms of areas that cash-flow. However I am extremely familiar with the Plano area because I own rental property in Plano, my office is in Plano, and I lived there for six years. East Plano is a great area because the houses are perfect for families with two children, they are typically in good shape, and you have access to Plano’s good school system, along with the safety of the area. Hope this helps.
Thanks Cristopher,
Are you east or west of 75?
i am on the corner of 75 and Plano pkwy.