Would you do this buy and hold deal?

[Becky Haag]

Purchase price $185,000.  Would offer $195K with no inspection.  Using business line of credit @4.25%. Pay for a few years with line of credit then get a business loan for the remainder.  $50K down from savings for down payment.  

SFH, Brick, Cape Cod. 3 bedrooms/1.5 Bathrooms. Oil Heat. 1/2 acre level property. 2 car brick garage.

Property tax $3400. Rent $1600 plus oil and electricity.  Cash flow $360 month.

Needs new carpet, paint and refrigerator.  

Would you buy this?

[Greg Scott]

With $50K down and $360 per month you get an 8.6% cash on cash return.  That is a bit on the skinny side, but not terrible.  If this deal fits with your lifestyle, and there wasn't another, better opportunity presenting itself, I would do the deal.

My only concern about what you wrote is the financing.  I don't like holding long-term with short-term financing.  A line of credit is short-term and a few years is long-term.  You don't want to be in a situation where your line of credit is expiring and the credit markets are in turmoil.