Intrest Only Loans and rental houses

In this day and time one can get a intrest only loan. correct?? My other question is if I buy a home @ 70,000 and finance 100% for say 30 years @7.5%intrest the average intrest would be about 295. and the property is currently rented out at 625 and on a month to month tis would allow a cash flow of 330 minus tax and ins.Total cashflow being say 100 is this a way to get in to REI with out much cash except closing cost? The plane is to hold for about 2 years and sell…rumor is CASINO’S are comming to town…2nd question knowing that CASINO’S are comming to town would you buy condos I can find them all day for about 95k on average?

One more question that being if financed for 10/15 years the intrest would be lower is this possable to do?

Shorter term loans usually have lower interest rates, but obviously, if it has a shorter amoritization, the payment will be higher unless it’s a balloon.
Just wondering how you came up with that interest only payment? You should be multiplying the principle amount by the rate per annum and dividing by 12. It’s a simple calculation. I come up with $437.50 on the loan terms you noted.

Well I wasnt sure the formula to figure out the I/O payments-man I wasnt even close! ???-so now I have to take the 437.50 and add tax and ins. huh? this property might break even…Ill pass on this one…thanks for the help

Correct me if I’m wrong, but I also think that the interest only loan will change to being principal + interest at a certain time, and the mortgage payments will go up at that time. Would you need to sell the house before that time? I may be interested in using this strategy as well.

Hey Travis, what I am going to do is by a home for say 131,800 full asking price do an I/O loan 100% pay 885 month and rent the property for 975 leaving cash flow of 90 month (going rent is 1,000 to 1,200 buy being just a little below market Ill keep my property rented out…here on the island you can find homes all day long for rent for about 500- 700 for a dump in a bad neighborhood and then you have the 1,000 or more properties in the great neighborhood… so my property at 975 in a good neighbor hood should stay full 3br 1.5bath and 2 car garage. 1680sqft…the plan is to hold for 3 years and sell for appriciation…

Interest only loans usually have a balloon payment if I’m not wrong of 5-15 years. I guess it would not be a bad idea if you ABSOLUTELY will plan on getting rid of the house after the loan matures.

THe reason being interest rates are eventually going to rise, and if your properly values don’t along with rents you could be forced to refi into an intrest rate that would eat into all of your cash flow or worse.

The plane is to absolulty sell the house in 3 years or so i also know that sice jan. this year property value have rose 21%…also the realitor said the property inquestion looks to be below market if so ill buy it and re list mean time while on the market ill rent it out to make the payments…
selling price 131k appraised at 150k ill by at 131k relist for 145k and take my money and run like carzy screaming “I FINALLY DONE MY FIRST DEAL!!”

I hope someone can address this. Signed a contract on an estate property. Had to offer full price (lots of competition and offers over 2 1/2 days). Our town was just ranked the 5th best place to live in the country by Money Magazine so property values are starting to run amok.
Still, paid under $300K. Rehabs/scrapes are selling for $700K+. This is the saddest house on the block.
Went for 100% investor financing (SI/VA). Appraisal came in spot on. Lender came back needing cash flow analysis/comps as a rental. No way could I rent the house for anything close to my mortgage payments (80/20). There are virtually no comps to be had. Interest rates are low enough people are buying (mostly condos). House wasn’t going to be rented (had never BEEN rented). Intent is to finish the rehab begun by the previous owner then sell it. Ended up with a 95% (80/15) loan and scrambling for the down (can’t be borrowed, need to know the source of the down, can’t be gifted since it’s an investment property etc. etc. etc).
Are there ANY loans out there where the specific intent is to bring up property value, which brings up the neighborhood value, which helps the towns economy? Having to come up with a cash flow analysis on a piece of property that will be sold within 90 days just doesn’t make sense. Even the mention of ‘fixing’ anything in the house sent the lender into a spiral (even remodeling the kitchen). All I want to do is make these sad little homes proud again.
Maybe government loans?

Why not do a HML? this will pay for purchase and repairs. Once repaired turn around and sell… And keeping for only 3 months you still won’t be paying as much in interest.

Interest only loan would definitly be the way to go for you or anybody if your planning to sell in 2 or 3 years as your pretty much only paying interest for that period. I have a $52,000 2nd mortgage that i refinanced my first mortgage and some Credit card debt into at 8.5%. My payments are $425 per month and $25 of it goes toward principal, so its not hardly worth it. But you will probably have to shop around, because i dont know if your traditional lender will do a interest-only loan on an investment property.


without a kitchen, you have a construction loan. You’ll need a construction cost breakdown, possibly blue prints, good credit scores, verified assets would be helpful, an appraisal that is going to include the after rehab construction, a seller second to bring down the high LTV lender request, …

without comps, your deal is going to be real tough,

if your negative in the rental comparative analysis, your deal could die alltogether.