All Forum Posts by: Cody Thompson

@Brent Coombs I'm not trying to trick anyone into anything. I was asking a stupid question on here instead of in the real world. That's what these forums are for. 

I think what we will end up doing is a payment around 1200 a month with a low interest like 3.5% and then with an agreement that I will refinance and give her a lump sum after 3-7 years depending on her needs. 

@Duke Marquiss I think we will end up doing something similar to that. Just waiting for her to do some homework on her end to find out what the place is really worth. I'm not in a rush and we know eachother well. So this will probably be a month or two process

Following. I am working on a closing on my first rental property now and was thinking of how I should approach the late fee. 

But my from my non experienced perspective I think that while it is completely legal to charge whatever you want for a late fee, when you go to court the judge might for whatever reason think that the late fee is excessive even if its well within the law and the signed contract. So maybe your eviction guy thinks that you will have a better chance in court with a lower late fee charged.

I would still go to court for the full amount and if the judge decides that it is excessive and only grants a lower amount such as 100 then nothing you can do. But I would still go in asking for the full amount.

Just my 2cents

Also an update on the deal so far. 

I met with her over the weekend and showed her documents of the surrounding areas and the property values in the surrounding areas for the last 10 years. Along with cost per sq ft and rents for the last year. then showed her the estimates I found on her property. She found this all really fascinating and we agreed that we would for sure need someone to come and give it an appraisal. The biggest problem is there isnt anything within a 20-30 mile radius to comp it to. But I showed her that her initial offer 260k (which was her offer so that she had room to negotiate to what she really wanted, I assume in the 240k range) that the cost per sq. ft. would have been $165 when all the towns around it that are more developed and more desirable are in the $80-$120 range. Giving her a premium just because I know her and its the only multifamily property in the town would be $120 sq/ft which would put it at about 188k. 

So now we are in a waiting period while she does some more research. Im not in a huge hurry and she is undecided on it. She really wants out since she is tired of managing it for the last 20 years but im not going to pay more than a fair price for it. She also said she Is more than willing to wait even a few more years until I can either afford it or she is completely ready to sell it.

By the way thank you for all your input

So some more details about the property. (and I think Im scrapping the lower price and high interest rate idea. I was probably a bit naive thinking about something like that. but am still planing on seller financing if we move forward with it)

The property is a fourplex that zillow (idk how reliable that is) has estimated at about 175k. The property is in a very rural are next to my high school. Its the only multi family property in the entire town so its hard to get comparables. But the details are as follows.

1,576s.f - Fourplex (so the units are pretty small)

rent is $625 a unit so $2500 monthy. (which I think should actually be closer to $700 since she doesnt get any vacancy except for the unit that she was planing to move into and was keeping empty just because she is getting tired of managing it.

taxes are $1400 ($117/month)

Insurance is about $100/month but I used $125 for my estimate

the property is well kept and the units stay occupied by the teachers mainly the work at the property next to them. But I factored in 5% vacancy 5% maintenance 10% CapEx 10% Property Management

Water/Sewer/Garbage is super cheap. Less than $100 a month according to her numbers which I still need to confirm.

Cash Flow depends on the deal that we work out. If it was a 15 year 180k @ 3.5% the payment would be about $1286 and my cashflow would only be about $156. But that is also on a 15 year mortgage. Which we talked about here carrying the contract for a few years and then I would refinance it and give her the rest in a lump sum. Which idk the specifics but I assume I could refinance it into a 30 year mortgage which would then give me close to $700 cash flow (and even more if I raised rents)

So I am working on a seller financing deal right now. I am heading out tomorrow to discuss numbers with her. I was wondering if there was any good lawyers in the Tacoma area that can write up a seller finance contract as well as lease contracts. 

Or are there any good resources for a good cheaper way to do this? Any advice is appreciated.

Keyword tags: Tacoma , University Place , Lakewood , Olympia , Shelton

The main thing is to do what fits you and your goals personally. As well as do what you can within the market that you are in. In my market condos range from 100k to 300k with HOA fees of $200-$1000 a month. But it seems like your market is more favorable in that regard.

As far as the second loan goes it depends on the cost difference from what you rent now to your condo. As well as adding another mortgage on top of that as that would dramatically effect your debt to income ratio which is typically a big factor in if most banks will give you a loan or not. 

You can always find other lenders though as well.

I am kinda in the same boat right now as I am young and renting. 

My suggestions about buying a condo is make sure to do your due diligence. Condos typically come with HOA fees and restrictions. It may not even be allowed to rent out on an airBNB or at all when you move out. You would just have to make sure you knew what you were getting into and have multiple exit strategies.

As far as a 2nd or 3rd loan go. You most likely wont be able to get a low down payment again. I am assuming you are approved for an FHA loan which is why you can have a low down payment. This is something you only get one of in your life except for certain circumstances.

What are some of your numbers on the deal if you would be able to rent it out? Such as your cash on cash return, what all did you include in your expenses, how much would it rent for, etc. 

Hope some of this helped.

Thank you @Michael S. and @Bob Razler! 

I've had a blast so far learning as much as I can!