Keep the deal or walk away due to rates? Smokies

[Luke J Nelsen]

Hey guys,

This past weekend we got our what would be third cabin under contract in the Smokies. Unfortunately rates went crazy on Monday before our rate was locked and now were looking at 6.5% and 3 points. This has put a dent in our returns but it still cash flows decently at about $800/mo. and about an 8.5% cash on cash return. Just curious your thoughts on walking away and risking our $2,000 earnest money or sticking with it? We'd love to re-negotiate with the sellers but they really have no incentive or reason to do so. We also have an inspection contingency to fall back on if needed.

I hate to pass up on a deal but don't want to take on a big risk in such an uncertain time when we don't need to do so. Any insights would be greatly appreciated.

Thanks!

Luke

[Kevin Luttrell]

Like Luke said, I wouldn't walk due to the rate. You're sure to have a refi opportunity at some point in the future. 

I'm closing on some refis with a local community bank in the area that was much better priced than every other option I found. They offer a portfolio loan product that allows mortgage under LLC, charges 1 point, and 30yr amortization. Minimum 15% down and you have to own a total of 6 units or less to qualify. Not sure what the rate is now but I'll bet it's much lower than 6.5% and with less points.

Here's the link if you think it's a fit for you: https://fcbanktn.bank/casual-i...