I found a triplex for sale by an owner who seems to be very motivated. Corner lot (6,500 sq ft). It has (1) 2/2 for $1000 a month. (1) 2/2 for another $1000 a month and (1) 1/1 for $500 a month. They are all currently rented out (Non-Section 8) for a monthly income of $2500 with three seperate electrical meters. He wants to sell for no less than $260k (Appraised in Jan.08 for about $350k) and would do Owner Financing with $26k down (10%). The terms of the financing would be discussed with more detail once he “sees” the downpayment. A Mortgage of $260k is about $1800 a month. So $2500 - $1800 = $700 a month profit +/- . Does this look like a good deal to buy and increase the property value while its rented out?
This looks like a terrible deal…you might want to do some more reading/studying.
What about:
Taxes
Insurance
Vacanies
Maintenance
Repairs
Utilities (like common-area lighting)
Trash
Water
Etc.
Etc.
Etc.
You’ll get your lunch eaten and, I’m guessing the seller knows it!
BTW - a $260K property with a 90% mortgage is only $234K…did he say what rate he would hold the note for and for how long?
Secondly, how would we know if the property value will increase? We have neither a crystal ball nor even a location.
My two cents…others will ‘wander’ by and offer theirs, I’m sure
Keith
I would advise listening to Keith. Figure 260K at a decent rate of 7.25% is $1600 per month plus taxes of around $290 per month and a lowball insurance estimate of $150 per month gives you a monthly payment of around $2050 per month. Based on the 50% rule this property could end up costing you about $800.00 per month. That does not include things Keith brought up such as common area lighting, trash pick-up, etc…
If it truly is worth 350K then you should be paying no more than $245K minus repairs. I would run not walk away from this “deal”.