You might want to check your numbers. How is that cashflowing at $700 per month?
At 100% financing at 7% interest your mortgage would be about $600 per month. That leaves you with $650 to pay all of your expenses. If you put 10% down at 7% interest you’d be at about $540 for mortgage payments.(both calculated for a 30 year mortgage)
Also, public records does not mean fair market value. If you assumed the house was worth $67K, you were willing to overpay by $23K to get cashflow?
I personally would never pay 100% of the value for a home. I don’t personally know any investors that would.
Like the laster poster mentioned, make sure your #'s are correct. If so, it sounds good even at a higher price. My husband and I once made an offer that was $10,000 more than the asking price. Why did we do that? A better cash flow. You can read it in my blog below.
It was more cash flow to have the owner carry with 5%down at a great rate than to get financing with the bank. She went for all but one thing, she wanted 10% down so we didn’t do it. At that time we were looking for and got properties with very little down.
I love playing with the #'s and being creative gave this deal a better flow. With the upword direction real estate took, I wish I had that property now.
WOW! I wasn’t thinking about 7% interest. The rate makes a world of difference. I was thinking taking a home equity loan. My local credit union is offereing 50K for 170/mth, or somthing close to that. So I was figuring payments to be no more than 350.00-400.00. I also was planning to rent under hud once the tenants leases were up(If I could run them out with higher rents) ;D. HUD offers over $300 per room. 950/mth.
I wouldn’t rely on HUD! We had to give the only hud tenant we had a 90 day to move because HUD wold NOT approve the rent incease. We only asked for $50 more per month and our rent STILL would have been lower than the going rate.
We have been wanting to get rid of HUD for years. They really are a pain. You have to do things to your unit every year that you wouldn’t have to do for other tenants. Like painting every couple years. Our tenant didn’t pass one time because screens were missing (they lost them), the window ceils were dirty (they don’t clean), and the porcelain in the kitchen sink was chipped (they chipped it). One time, but they changed this, the tenant didn’t pass because a metal tag that comes on the TP switch was missing! How crazy is that?
Than don’t accept the Government Cheese! It’s simple as that, don’t want the Government to tell you how to run you building, don’t take the Government’s (our money) cash! Remember they just don’t want a bunch of slumlords collecting section 8 money, so they are strict.
I agree. We inherited this tenant 9 years ago when we bought the building. Hated it from the start. We are far from slumlords, it’s the tenant that destroys the inside then HUD tells YOU to repair it. It’s just not fair. We will never again take section 8.
I also think HUD needs to be more strict with giving out “our” money. This tenant has a son who is now over 18. HE won’t work becasue he wants to be a basketball profetional. Come on, he is old enough to work and very healthy, why do “we” have to support him and his mother? HUD should look at adult children. Too many people take advantage of this system.