Potential First Property

[Jay Holder]

I have a potential first property that I want to purchase:

PP:130k for a Triplex

Total Rent $2025 all 3 units have tenants 

Monthly expense is 1500

For financing I am looking at private loan with 0% down. I would have the 130K plus 30K to rehab the property. If I could secure the loan in this amount and at the current % or below then my COC is at 38%. After the rehabbing, I would look to increase the rent on the property.

Based on these numbers, I think that this is a great investment to make but would love your thoughts.

[Jacob St. Martin]

Hello Jay, I have a couple of thoughts on this. First, Where are you getting your number for monthly expenses? Based on my numbers if you are borrowing 160k, assuming an interest rate of 10% your monthly principal and interest will be 1400 and that is not including taxes, home insurance, utilities, vacancy, capex, repairs, and property management (but i assume you will self manage). Also, the type of financing you are describing is not something that most private money lenders will do, do you already have a private lender lined up? The lowest down payment I have seen for a buy and hold is 10% down paying a 10% interest rate and 3 points. If you are planning on refinancing after the rehab and adding enough equity to pay off the private loan than this makes more sense but that doesn't sound like the case. Based on the way that you have described this deal I don't think it would cash flow and it will be extremely difficult for you to secure financing if you dont already have it, but perhaps you just left out some information. Let me know if you have any further questions or want clarification on anything I just said!