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Updated about 9 years ago, 11/01/2015
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Pay off credit cards or buy a 3 family in July?
Hey BP!,
Since graduating I found myself anxious to get into real estate asap! I keep reading all these success stores and I feel I am ready but the only thing holding me back is thinking should I get out of debt first or buy a property?
Here are my finances;
Age 23.
Career: Electrical Engineer (straight out of school) July 2015
Salary :42k + OT= ~45K
Debts: Chase credit card $4500 (15% interest), Citi credit card $4600(14% interest).
Total $9,100. Monthly payment $250~
Expenses: (personal) -$100/monthly + credit cards = $350/monthly
I live with my mom and I pay some bills and "rent" in order to stay there. = $850/monthly
Total Expenses= $1200/monthly
Total Monthly income before tax: $3500
Property location: Newark NJ
3-4 unit multifamily
Price range 50k-90k
Loan Program FHA 203k
Rehab budget: price+ rehab= $150K (Max amount)
Estimated taxes $6500
Estimated insurance $1200
Estimated ARV: 200k (conservative)
Estimated Rents for the neighborhood I want to invest:
1BM= $700
2BR=$1000
3BM=$1300
Downpayment: 3.5%
Credit score : 670
After 1 year I will refinance to a conventional loan.
Even with the debt that I have. My debt to income ratio is still low enough to be approved for a FHA loan. The bills and money I pay to my mom will go away once I move out. If a property contract is accepted I will ask for a 6% seller concession for closing costs ( I will increase accepted offer price to offset the 6% concession so the seller will agree)
What are your thoughts?