Okay here is the scoop. I currently own a 16 unit apartment complex iin Nashville. The last three years I have made quite a bit of money and positive cash flow about $1600 a month plus my current salary at work. I do not own a home for various reasons so I rent. I came across a home that the builder would like to trade for my apartment complex. My complex is worth about $655,000 minus $273,000 mortgage which leaves $382,000 in equity. The home is selling for $430,000. subtracting my equity leaves a $43,000 difference. The builder has agreed to finance the difference in house at 5% for as long as I want.
Basically I would owe $43,000 on a $430,000 home. Would you make the deal???
That would be killing the goose that lays the golden eggs. I would use the extra $1600/month to afford the house. In other words I would have both.
I agree w/ Bluemoon. No wonder the builder is offering “excellent” financing to you. If you’re paying retail for his house, he already pricing in profits there. Then he’s going to get a positive cash-flowing apartment complex AND he’s making interest on you too.
You guys are right. I struggled with the issue all weekend and my only conclusion is that I get the house free and clear or I walk away. Especially since the house has been sitting on the market since June of 2008. There is a reason its called “A buyers market.” Even us veterans lose focus sometimes.
I’m not sure I would want to do it if you owned the house free and clear either. If you did, I understand that would net you an equity profit, but you have a successful income property with a large portion of equity. You’re considering giving up a property that once paid off will generate a hell of a lot of passive income.