Small community banks and persistency

[Sterling Fields]

My wife and I were absolutely determined to buy an owner-occupied 2-4 multifamily so we can save money and work towards financial freedom. However, we were having a problem getting banks to lend on duplexes (standing behind the appraisal) due to the low volume of duplex sales in our are, e.g. freaking zero.. literally.. Well at least the ones that were sold through a realtor and reported as sold on the MLS.

My solution: I called over 20 banks and talked to a loan officer/vice president, or both, at every single one until I convinced one to give us the loan. The 21st bank agreed to do the loan and decided to do an in-house evaluation and forgo the appraisal.

We are closing on the 6th of July and will be the proud owners of an owner occupied duplex paying a whopping $90.23 per month after taxes, insurance, P&I.

Moral of the story: Persistence is key!!

[Sterling Fields]

@CJ Witmer My strategy is buy and hold. Our plan is to live here for a year or two, for very cheap, and use all of our extra cash to acquire rental properties (obviously setting aside reserves for each property).

Purchase price: $150,000

Down payment: $10,000 (one advantage of using a local bank, they make exceptions for LTV, etc.)

Interest rate: 5.16% (little high, but worth it for non-fha house-hack)

P&I, property taxes, and insurance: $986.12 (also, since it is an in-house bank loan there is no Mortgage Insurance, sweeeet!)

Other side currently rented: $900

We owe $86.12 per month!

We have sufficient cash reserves to cover maintenance and repairs, so while we are living there we won't be setting that aside. When we move out however, the numbers still work. That side is currently under rented for the area and needs some desperate TLC. This is definitely a value add property.

When we move out it should rent for $1,000 per side, cash flow around $412 (5% vacancy, capex, and maintenance), and yield a yearly cash-on-cash return of over 40%!

Does anyone see anything that I may be missing in these numbers?