My first deal...

[Phil DuChamp]

Long time, first time...

I'm closing my first deal this month.

A friend I use to work with bought several houses a few years ago.  He was relocated for work and asked me to manage the properties.  He paid cash for these and is looking to get some of that back.

He offered to sell me one of the homes.

The good: I've managed the property for several years and know what it needs and what's been done...Takes in $699 with about $300 cashflow...Tenant has been there for 2 years and is about to re-sign 2 year lease, pays every month on time...Has a garage apartment that will take in about $400/mo...It's about 3 blocks away from my house.

The bad: The garage apartment needs a considerable amount of work, which I was expecting...

A couple of questions:

My lender asked why get a loan if I can get pay cash?  Since this is my first deal, I felt more comfortable writing a check for 15k rather than 55k.  Do you have any opinion one way or the other?

I noticed the tenant screening on BP.  While I don't need it immediately, does anyone use it and how comprehensive is the info provided?  I've seen how landlords will require tax returns if self-employed.  If they are not self-employed, is income part of their screening process?

Comments/Questions?

[Jeff Baillis]

What kind of rate are you borrowing at from the bank? Would your buddy consider owner financing with the same amount down? At least you could potentially save points/origination fees and maybe get a better rate. 

The added bonus is that the owner financed loan won't be visible to the bank in the future when you go back for money you really need to do a deal.

Best of luck however you proceed!