My First Deal - am i doing this right

[Sipo Thao]

Hey guys,  So i got a home under contract for 55k.  I estimated 15k in repairs with a 110arv.  The place will rent at $1100/month.  And is rent ready with just a small facelift.

I am using 3rd party financing with a local bank. The appraisal came in at 70K in as-is. and 110k after repairs. the bank says they are able to loan me max $56k. 5.25% 7 ARM. 20 yr amort.

Do banks usually do this?  I called the banker and he said i will just need to cover the difference at closing.  Is it a good idea to borrow the full amount or put some money down in this situation.  

[Thomas S.]

You are correct. Once you are completed your DD go back with a lower offer and you may be able to come out cash ahead. At the very least I would try for $50K

In many cases you can be cash ahead if you can convince the bank to finance even higher or you lower your purchase price.

Set up your mortgage so you can have the property reassessed at completion so you can pull out more cash to reinvest in the next property.