Is this what $0 means?

[Account Closed]

I found a house I want to purchase for $140,000 with an assessed value of $180,000. For any bank financing, I am required to put down 25%, or $35,000. I am going to pay the 25% down and get a 30 year fixed mortgage of $105,000, then as soon as I am able to (2-6 months) I am going to refinance the loan for $150,000. I will get my $35,000 back so it will essentially be $0 down, I will have the house, still have some equity, and have extra cash in hand for any unexpected vacancy or to use as another down payment later on.

Am I overlooking anything? I realize with a refinance I may pay a bit more, but the numbers are all still good, I will have a $200/month cash flow from day 1.

[Don Konipol]

Yeah, you are overlooking ALOT!

1- Assessed value is a valuation for tax purposes, often has absolutely no correlation with market value, which is the actual value of the asset at a given time.

2- Cash out refi of investment property is not possible in 2-6 months. At least a years seasoning would be required.

3- How much in expenses are you allowing for in arriving at your $200 per month cash flow? On SFR, the average expenses are 45-50% of gross rents. And this does not include interest payments! Most inexperienced property owners deduct only taxes and insurance. Real expenses include depreciation, repairs, maintenance, vacancy loss, leasing fees, management fees, accounting fees, legal fees, all fees necessary to carry out an eviction (if necessary), postage, office supplies, HOA fees, landscaping, make ready upon tenant move out, etc. Have you included all expenses in your analysis?