NEED HELP - Analyzing Potential Portfolio Purchase!

[Rosemarie Farnum]

After analyzing around 60 different properties and deals this month I think I have finally found one that could work for me. I've ran the numbers a few different ways and still come up good, however it is a Portfolio purchase comprised of 4 single family properties. I would be seller financing about 400 k after 60k cash DP at 5 percent amortized for 30 yrs. I have a cash reserve specifically for this purchase and would love hear from / personally talk to someone with experience to see if 1. I am overlooking anything 2. If there is a better way 3. Is it smart to make extra payments monthly to save on interest, and 4.Things I need to know about taking over a portfolio purchase . Mentors are welcome, thanks in advance!

[Greg Dickerson]

Hi Rosemarie,

You really need to evaluate income and expenses to make sure you have a substantial cushion to cover unexpected repair costs and vacancies. One bad tenant or major repair can wipe out all your profits in a single tenant property.

It never really makes sense to use extra cash to pay down the mortgage unless you are only going to do this deal and use the income as an annuity. 

The purpose of using leverage is to provide cashflow to buy more property, to provide cash to buy more property and so on. At some point you may want to stop buying and either sell or use your cashflow to pay off all your property but again that all depends on your needs and goals.