List price above budget...what options do we have?

[Corinne Ulloa]

Hello BP Community,

I am reaching out in hopes that someone has knowledge of a loan product or some creative way to make the monthly payment on a property that I have my eye on more easily digestible. It's above budget, but there is most likely some room to negotiate because the house needs a lot of work, but it's mostly cosmetic the home was built in the 70s and has not been remodeled since, it even has shag carpet! It's currently listed for 950k but it's really a prime location for my future endeavors in real estate. There are several comps around it that are listed at 1.2 million+ so I believe that if we put in an offer and it's accepted in that range, there will be built in equity. The property has a large fishing pond and butts up against a river that is a very popular location for the area. A River House! Ultimately, we'd like to get a Tiny Home permitted as soon as the county will allow (and eventually a second since zoning allows for it) and list it on AirBnB to offset the mortgage.  We'll self manage the property. 

There are some challenges and unknowns that would need to be worked out too first before we can begin making money on our investment. The driveway requires some excavation/leveling. This way we can ensure that our guests have a safe driveway to reach the tiny home. We'll also need to get someone out to survey the land to make sure that building is ok, but this will be done during the inspection phase and will be made contingency. Also, we'll need new appliance so that there's a functioning kitchen as we will live in the main house as our primary. With this in mind, we'd like to use a a little cash as the deal will allow for purchase so that we can have the funds necessary to get those things handled.

According to AirDNA and a property management company in the area, we can expect the following:

ADR: 201

Occupancy: 71%

Annual: 51k

My first thoughts are to look for a 40 year mortgage option that would allow us to keep our monthly payments low until we are able to get our rental setup? If that's not an option, perhaps a 3-2-1 or 2-1 buydown loan product? 

Here are options that we have to access funds to in order to make the deal happen:

We plan to put down between 5-10% from bonds (hopefully nearer to 5%)

We have equity in our current home that we will rent out when we move to the new primary - (owe 476k, could sell for about 675k)

We have the ability to take out $50K as a 401k loan

50k in CDs (not matured yet) - but would really like to hold on to these for reserves

8k in stocks

10 - 20k from Family

Thanks so much in advance!

Corinne