Baton Rouge, LA · Member since 2015 · 7 posts · 1 vote
Happy New Year!!!
I wanted to share my project and get some feedback on my first deal
I'm 25 years and about 4 months ago my Mom and I bought our first real estate apartment at $90,000, small condo two bedrooms near a college area that generates $517 per room (including utilities).
I have been considering using our equity in the property to get a loan and expand our portfolio
@Account Closed, Happy New Year, and welcome to BP.
So, you and your mom originally had $90k cash? A lot of people here might have suggested that you could have already split that up into a deposit on three of four properties, rather than just looking for one that would give you 1%/m cash return.
I am among those who would suggest you DON'T pay $90k for properties that appraise at just $90k. Is that the case with your condo? Because if so, your equity is no more than you already had before buying.
Every time you pay close to retail for a property, you are limiting your opportunity to get ahead of the game. For now, I will leave you with those thoughts. Cheers...
@Account Closed, Happy New Year, and welcome to BP.
So, you and your mom originally had $90k cash? A lot of people here might have suggested that you could have already split that up into a deposit on three of four properties, rather than just looking for one that would give you 1%/m cash return.
I am among those who would suggest you DON'T pay $90k for properties that appraise at just $90k. Is that the case with your condo? Because if so, your equity is no more than you already had before buying.
Every time you pay close to retail for a property, you are limiting your opportunity to get ahead of the game. For now, I will leave you with those thoughts. Cheers...
So, you and your mom originally had $90k cash? A lot of people here might have suggested that you could have already split that up into a deposit on three of four properties, rather than just looking for one that would give you 1%/m cash return.
@Brent Coombs No, we have received an inheritance in a form of a property. So the property is now paid for, we could sell it whenever we want to.
I am among those who would suggest you DON'T pay $90k for properties that appraise at just $90k. Is that the case with your condo? Because if so, your equity is no more than you already had before buying.
@Brent Coombs The market price of the property is 106K, we are able to get it for 83k because it needed it a lot of work, we spent 7k in fixing it [we are not expert, first-time deal].
Every time you pay close to retail for a property, you are limiting your opportunity to get ahead of the game. For now, I will leave you with those thoughts. Cheers...
The reason of my post is because I couldn't find any simple ways of getting mortgages [I'm full-time college student] 3 properties and run all of them. So instead, http://www.b2rfinance.com/products/portfolio-pro-l... offers the capital to buy more properties using the equity of the property as collateral.
So the reason of my post is looking for insights on what should I be paying attention if we take this capital expand the portfolio.
@Account Closed, aah. I looked at that b2b site. In summary, they are saying that as long as you put at least 25% down payment each time, AND you can prove that each property will positively cash flow even after your monthly payments to them are made, then come right in.
Well if you can meet that criteria, I would think you should have no difficulty getting those same needed dollars from most other Lenders too.
I think you will find that THIS property does not meet their criteria. If you are hoping to borrow 75% of its value for other properties, then they will require your return on THIS property to still be higher than the mortgage of $76.5k that you will have incurred. My guess is that your $517/m return is LESS than those payments would need to be!
My instinct tells me you should:- sell. Back to you...
It's $517 per room, two rooms we are getting $1034 right now
Unless that's NET $1034 (after expenses) rather than GROSS (before expenses), then my previous calculations should be fairly close, and my recommendation would remain the same.
But if your after-expenses income from it is more than $1000/m, then you might be fine with your proposed strategy. However, I would still recommend getting quotes from other Lenders, rather than being lured by one company's glossy marketing.
I suspect your average net income from this property will be closer to $500/m than it will be to $1000/m. The word "Condo" is why I think that. HOA fees are known to soak up cash flow faster than water flows down a drain.
As for what to do once you sell, you might like to look at my previous replies again? Certainly there's LOTS you can do with $90k!
The money was given via a trust for us to purchase a property and invest it @Kathy C.
Ah Okay! Just for future ideas, consider not buying the property in full. Get a loan instead and have capital left over to put down as downpayment. What do your numbers look like including Hoa, management fees, etc. ?