Good Evening everyone!
I want to bounce an idea off of you all and see if my logic on this makes sense.
My uncle owns a property in Iowa City, which is a great place to own real estate and a market I want to get into. There is a chance he moves within the next few years and I had talked to him about purchasing the property from him to add to my portfolio as a rental. I was thinking that, since he got his loan through the VA and I believe it is assumable, if this is something that any of you have done, and what goes into assuming a loan, and what are some things to look out for. The reason I want to assume the loan is his interest rate is far lower than I can get today, and at a 6-7.5% percent interest rate the numbers do work, but if I could take over his loan of sub 2%, obviously, it would enhance the investment a great deal on a cash flow basis. I ran the numbers back of the napkin, and here are 2 scenarios given the higher interest rates.
| Property Price |
$315,000 |
| Loan Amount |
$252,000 |
| Down Payment |
$63,000 |
| Rent |
$2,650 |
| Mortgage |
$1,960 |
| Taxes |
$350 |
| Insurance |
$105 |
| HOA |
$100 |
| Total Cost |
$2,515 |
| Monthly NOI |
$135 |
| Yearly NOI |
$1,620 |
| Appreciation 3% |
$9,450 |
| Debt Paid Down |
$8,400 |
| Total Yearly Earnings |
$19,470 |
| Yearly Return |
30.90% |
|
|
|
|
| Property Price |
$315,000 |
| Loan Amount |
$252,000 |
| Down Payment |
$63,000 |
| Rent |
$2,800 |
| Mortgage |
$1,960 |
| Taxes |
$350 |
| Insurance |
$105 |
| HOA |
$100 |
| Total Cost |
$2,515 |
| Monthly NOI |
$285 |
| Yearly NOI |
$3,420 |
| Appreciation 3% |
$9,450 |
| Debt Paid Down |
$8,400 |
| Total Yearly Earnings |
$21,270 |
| Yearly Return |
33.76% |
