My First Rental Deal, Opinions Please

I have an opportunity to buy my sister’s house at a pretty good price.
She bought the house 2 years ago and has experienced a reduction in income/job hours. She just wants most of down payment back.

She wants to rent the house for two years minimum which is fine with me because she lives about 4 hours away.

I can buy it for $77K, and the total payment will be $836, she currently pays $853 a month. I plan to sell it it 2 years. The comps are running $87K-104K in her neighborhood.

The loan I am looking at is a no down 80/20 (never heard of that kind until today).

I like the deal because I can get my sister some cash, keep her in a house with her kids while in high school, and hopefully sell it for a $10-14K profit.

I would sure like to hear from the vetrans of this board as I have learned a lot here. Many thanks!!!



If you only plan to hold for two years, perhaps an ARM (Adjustable Rate Mortgage) is in an option for you – it can give you a bit of a break on the interest rate and usually cannot adjust for a given period of time (2/3/5/7 years, depending on the note)…just a thought that might save you a few dollars per month.

I was wondering about that myself. The lender was pushing the 80/20 loan. The rate for the 80% is 6.5 and the rate for the 20% is 9.5%. He said we would avoid paying PMI that way. I see what he’s saying, but is this the best laon deal for me? Still investigating the loan aspect.


There are several “loan folks” here that I am sure will step up and offer to help. Usually, the ARM rates are quite a bit lower than the standard mortgage rate.

I don’t know if anyone offers an 80/20 where the 80% part is an ARM…but I don’t know why they couldn’t.

Why do you feel you have to get a new loan?

Did she not get a loan on it 2 years ago?

You can take over that loan and not incur the 2-3K that a lender will charge you for the privledge of getting another loan.

If you must get her cash now why not have her do a wrap on the existing mortgage. You then do a rate refi on that wrap so you don’t have to be paying a high interest rate on a second. You can refi quickly after the refi and it will all be a low interest loan as a first.

This is an excellent idea. Thanks!!! One more newbie question: Are Wraps legal in Texas, and how do I go about doing one?