Newbie Reasonable Expectations?

[Stephen Olender]

Hi everybody, x-post

I’m planning to start a real estate business with one of my good friends. He’s been a landlord on several multi-family units. He has the practical experience and I’m more of a numbers guy.

I have an idea on a property that we could go in on for our first rental and I want to see if you all think I have realistic expectations.

Subject property is a SFH. That was a former duplex. It has an estimated value of 216k and is listed for 208k. The property has a tenant in place at 1800/month. Seller is looking for a cash buyer (proof of funds) and stated property as is.

My plan would be to go in at 188k. Use a hard money or a private lender for 30 months at 30 year amort. After showing 24 months of rent, refi to a conventional.

Are my expectations anywhere close to reality? What am I missing ( or at least haven’t told you) that you might need to know to be interested in this kind of deal?

Thank you

[Ryan Blake]

@Stephen Olender Most HMLs won't lend past 12 months. There are some that will but it is not commonplace. And it definitely won't be amortized over 30 years. Most hard money loans are interest only anywhere from 10% - 15%. Do you already have an HML lined up that is offering what you suggested?

Why are you going to wait 2 years for a refi? There are multiple long term lenders from small banks or mortgage companies that can refi with no seasoning or 6 month seasoning on the short term money. I don't see a reason you would want to hold it for 2 years in an interest only loan. I suggest staying away from the big banks that will have things like a 2 year seasoning period. They won't be a good long term relationship for a new real estate investor.