Buying a Owner Financed Property.

[Mark Fitzpatrick]

Hi, This would be my second property that I am looking to buy. I rent my first property that I lived in for 4 years and make a decent ROI. I currently rent and would like to buy something to hopefully do the same thing again. Which is live in the residence for about 4 years then rent it. I figured this is my best route to investment properties since it is less risk for me and I don't have much capital. I found an owner financed property which interests me because I just moved to the area and the mortgage company wasn't giving me enough of a loan to get into a home in my desired area. I just don't know if this is a good deal for me or not?

The Deal - It is a 3bedroom 2 1/2 bath in Mount Pleasant SC. The owner is asking $238,500.00. The exterior was refurbished so there is a 10k special assessment. The owner would pay 6k towards the assessment bringing the sale price to $232,500. Leaving me with the monthly assessment of $130.00 until paid off, about 5 years. The owner is asking for 10k as a down payment. Then he would do an interest only loan at 5 3/4%. He said he would do an interest only loan to make it affordable for a young professional like myself. So it would come out approximately according to him to --- Sale price 222,500 *5 3/4= 1,066.15 Interest payment. Plus the POA and assessment fee of 536.50+1,066.15= 1,602.65. Plus insurance and taxes 100 + 1,602.65 = $1,702.65 total monthly interest only payment. Which is a decent payment but at the top of my budget. I would be paying about $1,500.00 a month in rent. I have about 18k saved up for a home purchase. So I would have some emergency money left. Then he said if I wanted or could I would be able to pay a lump sum towards the principle at the end of each year. I may not be able to pay towards the principle the first year but would hope to the following year or when my salary increases. The unit is in nice condition. It doesn't need any work but needs some updating eventually. Which is good for me because I can choose the materials. The area is a really nice city. Homes in the area are appreciating at a high rate. I think the home value would continue to rise although I thought his asking price was a little high for the unit. He would not charge any penalty fees if I paid the loan off early. I think this is all the info. Let me know what you think or if I need to give some more info?