I concur with kdhastedt. Our plans look almost the same. My wife and I both work and I use 30 year fixed. I am looking to get 20 houses instead of the 40 to 50. YOu need to understand the business you are building. If your business is buy fix up and sell, the deals you look at are different than the ones you are going to hold onto. Don’t mix them.
hi, bluemoon06. My plan is also buy undervalued property and cosmetic fix it and hold. May do 1031 exchange later on if i feel ready to jump to the commercial side. But I think most undervalued properties need some work before it is in best shape to rent. I saw one of your post that it takes u 2 to 3 month to work on it and rent it out.
My lender requires me 20~25% down for income property (state income). I don’t think I can make initial cost under $10K. Unless I can arrange 2nd loan for zero down if there is still a decent cash flow.
Try to get the seller to hold a seconfd for 20%…if they really want to sell, they often will.
Keith
Keith. I will defenitely ask for that. Is owner carried interet rate usually lower than bank 2nd loan rate? Or it only saves the cost of loan?
Kd,
Would you explain what you mean by “try to get the seller to hold a second for 20?”
I know this is core essence of the program, and I’m not quite getting it.
Many thanks,
Realnew
Realnew,
What I was referring to was that Ranierblue said his lender would only lend 75-80%. Perhaps the seller would take a 2nd mortgage for the balance of the loan.
This will often work because the seller may own the property outright or may not want to be hit with the entire capital gains burden in one year. In essence, the lender gives 80% of the mortgage amount and the seller lends the buyer the other 20%.
Bottomline – YOU NEVER KNOW UNTIL YOU ASK!
Keith
So, Keith -
In getting the seller to take the 2nd, is that when you propose montly payments to him/her for a specified period of time?
And that would be - interest-only payments, monthly for X period of time, with principal due in (5) X years?
if yes: then you would go to settlement, take ownership, then when you close your next deal, pay the former owner in full?
OR
option 2, use the cash flow from the property to pay him/her?
In getting the seller to take the 2nd, is that when you propose montly payments to him/her for a specified period of time?
Yes. You might also have to explain the tax benefits of only paying the Capital Gains as they are received and having a monthly income stream.
And that would be - interest-only payments, monthly for X period of time, with principal due in (5) X years?
It could be. I could also be $X amortized over 20 or 30 years but a balloon in 5 years, etc. There are any number of variations.
if yes: then you would go to settlement, take ownership, then when you close your next deal, pay the former owner in full?
If the seller is open to that, it’s a possibility. If they are trying to reduce capital gains or are trying to generate an income stream, they may like the monthly payments.
Keith