Buy and Hold opportunity here in Union City, CA

[Jerrold Meer]

So I got a call from one of my agents who's actually a close friend of mine about a condo that's not yet on the MLS and he tells me it's a great opportunity for cashflow. It's selling for $275k 2 bd 1 ba condo with cashflow of about $300-$400 after taxes.

I guess my question is this, I don't have the money to get this deal and he's only asking about a 3% down, should I try to get a hard money loan or maybe ask a private lender around the area??? I won't get approved for a traditional mortgage so I'm stuck with these options and these options only.

[Jon Holdman]

A FHA loan from a bank is a minimum of 3.5% down if you're going to occupy the place. A conventional loan for an investment that you're not occupying is a minimum of 20% down.

$1500 to $2100 is a HUGE range. You would want to narrow this down to more like +/- $50 before buying.

This is a crummy deal for cash flow. There may be a speculation play, but if you're looking for cash flow, this isn't it:

Price $275,000

Down payment $55,000

Loan: $220,000

P&I payment: $1181 (5%, 30 year fixed)

Rent: $1500

Expenses, capital and vacancy: $750

NOI: $750

Cash flow: $431 a month LOSS

Even if rent is $2100 you're looking at a $131 a month loss.