what what you do? First purchase high interest rate East Bay, CA

[Bunmi Ajose]

Hello All,

Id really appreciate some advice on a property that Im looking into purchasing for my first investment/home in the east bay, California. Price 1.3 mil. Its a multiunit with 3 houses on one lot. All are occupied with tenants. The gross rental income is 8050. I was initially planning on continuing to rent them out but the lender for that option with 15% down didn't like the fact that the homes were detached and that one of them was un-permitted. It is a place I would like to live and so I looked into additional loans add went the portfolio route, but no success thus far. The rates just seem really high. I went from 3.62% 30 year fixed to a 6.25% 5 year ARM. I just think that interest rate is a lot. It puts my PITI at 8262 monthly not including utilities (~ 240/month) and then saving for cap ex, vacancy, and the repairs necessary to bring the un-permitted unit up to code. Also lawyer fees to deal with the move-in and subsequent payout (~ $15000) It's in an up and coming area though I do think the rents are close to the max for the neighborhood currently. Certainly the place will appreciate, but Im concerned about waiting for that. The current loan requires 15% down and is at 6.25% 5 year ARM.

Thanks!