Hello,
I am looking to invest out of State (I live in CA) and I am interested in cash flow properties. I have been looking mostly in the Dallas / Fort Worth area through MLS listings and I see a lot of reasonably priced Condos below $30K (asking price) that appear to have a lot of potential. My plan is to apply the 1/2 rents - mortgage = cash flow as a base line. I am factoring the HOA fees as part of my mortgage. Based on what I see on the web, it looks like I should be able to get a Condo for around $20K that rents for $600, with HOA fees around $150.
My plan would be to use my HELOC to purchase the property and later refinance at 70-80%LTV. My problem is that I know it is hard to get a typical home loan for less than $30k. Would it be possible to buy or refinance two Condos (same complex) under the same loan, that way my loan would be for well over $30k? Also, do you see any major flaws in investing in Condos? Is it hard to get renters for Condos in the Dallas / Fort Worth area?
Thank you in advance,
Jake
One downside I have heard about Condos is that they do not appreciate as well single family homes.
Jake,
I am doing loans for a couple of condos similar to what you are talking about. Basically the way my customer is doing it is putting down 10% per condo and financing the rest. The only kicker is the APPRAISED value has to be at least 40K. My customer has not had any problem renting out his condos. We have done five already. The way he does it is he goes to the VA hospital nearby and puts up notices. They get rented very quickly because many of the disabled vets in the area want to be close to the VA hospital. The lender allows up to 10.
Getting two loans together would be a blanket loan. The only issue would be that you would have to sell both as a package in the future, or ask the bank to allow a partial lien release which is never easy because of LTV issues.
Condos do appreciate slower here because there are so many going up, and the absence of land value to rise along with the property appreciation. Hope this helps. Good luck.
Christopher,
Thank you for the reply. Is the $40K per each Condo or is it both Condos summed together? If a single Condo is $40K wouldn’t it just be easier to do a single traditional loan, or is that still to small of an ammount for a bank to be interested? I guess combining the two would reduce closing costs.
Ideally I would like to buy two Condos at around $20K each with appraised values around $30K each. That way I could buy them for $40K with my HELOC and repaint and make some minor improvement, then hopefully a bank could give me a new loan based on an appraised value of around $65K at 70-80% LTV. That should give me enough to pay off my HELOC, leaving room for other deals, and at the same time ending up with a property that is cash flow positive. Also, I do have a good credit.
Thank you,
Jake