How plausible is this?

[Natalie Kolodij]

Basically I've come across a really unique property on MLS that is a duplex and SFH on one lot.

- Duplex units 2/1, 800sq, basement with W/d - Renting for $1,100 Each

-House 2/1 1200, basement with W/d - Renting for $1,200

- Rents are below market and could be raised to $1,350 for each duplex unit (I would occupy house, eliminating my current $1,500/mo rent payment)

 -Property is listed for $450k

-Duplex alone would value at $260-280

-House would value $250-270

- Mortgage with 3% down works out to apx $2,500/ month 

-With rent increases to $1,350 netting $200 rough (without adding in expenses, repairs, vacancy ect) in addition to my living rent free. (Would pocket my $1,500 previously paying for contingency expenses above) 

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This is the dream set up I've been looking for (multi family with separate dwelling) 

It's also .5 miles from my job , and .5 miles from my roommates job. 

It's about $150k more than I was even considering, but allows two rental incomes, as well as my dwelling. 

....

Now- I don't have the 3% down. 

I'm trying to figure out if there is any type of creative way to make this work. 

-Washington does have a WSHFC down payment assistance program I'd qualify for....I'm not sure how quickly that whole thing would take. But it would give me the $10k needed for down payment. 

-Is this something a hard money lender would consider? a $10k loan at 12% paid back over 12 months type of thing. 

-Is there ever an enticing way to owner finance or get them to work with you without a down payment? (I know they can't give you the payment per fha) 

If it's the world's worst idea, Please feel free to tell me this as well. :)

[Jeff Copeland]

What are you basing the appraised values on? A multi-family is generally appraised according the income approach, more so than comps. 

At $3300/mo rental income, it's currently operating somewhere around a 5-cap...which may be great for your area, or may not. 

So, at a very quick glance and without knowing your market, it doesn't appear to be a breathtaking deal at 450k / 5-cap...but in your specific situation, it might be perfect!

If you have excellent/perfect credit, there are some lenders offering conventional loans at 1% down now, so shop around. Of course, you also have to have the income and DTI to meet their underwriting requirements for the loan. If you can't scrape together $10k, you may not qualify based on credit/income/assets. So you might want to start by speaking to a few mortgage lenders to determine what is feasible and realistic for you. Or maybe look for a co-signer.

You probably won't find a hard money lender that wants to float you a $10k down payment assistance loan (that's more in the realm of a loan/gift from a family member), and the sellers usually can't owner finance without getting a down payment big enough to pay off their own mortgage (though it's certainly worth asking...you never know what their situation is until you ask!).

Another question to ask is how long the current leases are for...you will most likely have to honor those as the new owner, and if the tenants are locked in for another 6-12 months, that may kill the deal if you can't move in right after closing.