MAKIN MOVES! IM MAKIN MOVES! haha
So everyday I feel as if my education grows from just readin the posts on this board. Here is my update.
Since I registered, I have found some properties in CT(new haven,hamden) area through several realtors. This method was recommended via another post.
The homes range in price from 95,000 - 240,00. I am going this weekend to see the homes and scope out the area. My first question is do you guys have any advice that may prove to help my endevours this weekend while I talk to the Real Estate Agent? What should I do to prepare myself?
Secondly, I found one mortgage broker in CA that would give me 100-115% financing on a home at 6.5%. Do you recommend that I look for others with lower interest rates?
My fear with homes approaching the 200k mark is that being my first home, if I don’t rent the property out within the first month I am setting myself up to go in debt with the money being paid for my mortgage out of pocket. Has anyone encountered this situation before and how did you deal with it?
Thanks for all the help and lessons guys, It is greatly appreciated.
JP,
Tell the realtor that you looking for people that are DESPERATE TO SELL. These would include properties that have been on the market a long time, recent divorces, people who have purchased a new home but haven’t sold their previous home (two mortgages), discouraged landlords, people behind on payments, people who have lost their job, etc.
Also, before you talk to the realtor, you need to find out what rents are in your area. Run the numbers to see what price you can pay for a house and still have a significant cash flow. I doubt that you can get a $200K house to cash flow as a rental. As a general rule, the monthly rent must be greater than 1% of the purchase price to make a property even worth looking at. I generally purchase properties where the monthly rent is close to 2% of the purchase price. However, don’t count on this “rule” to make your purchase - run the actual numbers!
I’m looking at 2 apartment buildings this morning. They are being sold by a motivated seller who just wants to get rid of them. I can get them at 60-70% of market value and the rent is 2% of the purchase price per month. There is significant positive cash flow which is about 1/2 of the mortgage payment. I can buy them either subject to the existing mortgage or with a bank loan and will have none of my own money in the deals and will probably get a little money at closing. This is what you’re looking for except you’re looking for single family houses. Remember that you’re looking for great deals. Shoot for 50-70% of market value. Don’t become a motivated buyer or you WILL end up a motivated seller!
Good Luck,
Mike
Thanks for the feedback and I will respond to my realtors with the suggestions that you provided. The 220k house has two bedrooms, one with rent of 2400, the other with 800 a month. The mortgage with a 5% interest and principal of 230k comes to like 1200 or so with taxes factored in. So that equals about 1300 dollar positive cash flow.
Any suggestions however on how to deal with homes the first month and if I can’t find a renter for that period?