All Forum Posts by: Rob A.

We are still going back and fourth finally got the HUD and it is funny the taxes are in a section labeled "To be paid in advance"....if that does not equal 'pre-paids' I don't know what does. My mortgage guy is at a loss, as he sees this as 100% clear and has never had anyone try to make this argument before.

I am 99% of the way through a deal, closing on Monday (today is Thurs)... but the seller just pulled something I have not seen before:

We negotiated that the seller paid 12k towards "Closing costs and Pre-paids"

They are now saying that they will only cover 9k, the difference is that the taxes for the year were already paid by the seller and therefor we are paying them back the balance and they don't consider that a pre-paid. Our lender is fighting them and said they have never seen anyone try this... they do sometimes try to exclude pre-paids, but that that is why we were specific in our negotiation about that.

Searching around I could not find anything on this, the original 12k was not even going to cover everything and we still had to bring about 3k more to the table...

Advice would appreciated. Oh, and this is a Homepath loan, just FYI.

Thanks,
Rob

Doug,
Wow I am really surprised that you can find anything under 100k in the bay area. Is this out in Vallejo? I left the bay area in the late 90's and property was crazy even then. I was in the east bay and occupancy rates were practically over 100%.... I recall being one of 15 people waiting to see an apartment the first day it was avail, but that was Berkeley/El Cerrito ...

The closer to Bart the better, but I also know that in the 90's lots of companies were moving out of the city and heading toward the Concord area. One thing with the area I was in is that most rentals were turning over fairly often, but the were rented again immediately.

Thanks Jon.
I am really more concerned with long term over immediate cash also.

The two I am looking at are pretty different... This one is a much nicer and more modern place built in the 90s, 4bed 3.5 bath, the neighborhood is comfortable and nice. I would happily here.
The other is a not as nice in that it is smaller only 3 bed 2.5 bath built in the 80s. Mainly due to age the neighborhood is not as nice, yards are a little less cared etc.... but it is quite a bit cheaper...

decisions decisions... too bad there is not always a 'right' answer. Thanks for all of the feedback.

one more question...

I plan to hold for 5-10 years so how does appreciation play in??

This unit cash flow's OK not great but is in an area that I think will appropriate very well...this unit sold for over 300k a few years ago, I don't expect that anytime soon, but the size of the unit and the neighborhood are desirable.

It makes some sense to me to get into something that cashflow's well enough but will appreciate well?

Advice/thoughts??

Found another one...

Value about 90k, think I can get it for 60k

Basic number:
Rent $1000 - $1200

Expenses: $500
NOI: $500
Mortgage at 6%: $360
Cash flow: $140

Seems to work. My one concern is that I don't expect much appreciation on the unit, not that it is in a bad area, just an older area.

Wow that was fast.

Thanks again for the info, this one might not make it...but every step gets me closer.

Jon,
Thanks for the reply, I was using the second of your calculations. But I came out a little differently...
I think the 2 differences were that I was planning on putting 10k down and I am able to get less than 6% financing (but using 6 for the calculations. )

So:
Rent: $1400
Expenses: $700
NOI: $700
Desired cash flow: $100
Max payment: $600
Max loan: $100,000
Rehab $3000
Max I can pay $ ??? My math says 107 is OK if I am putting down 10k?? (I would put down 7k and use 3k for the rehab.) Which makes a 105k purchase seem ok.... but, Where does the down payment fit in?

I am sure I am missing something, so I appreciate any advice.

house, built in mid 90's 4br 3.5 ba.
Value about 140k, I can get it for about 105k, it needs paint and some carpet but that is about it.

Will rent for $1400 with no issues,

According to my math it works out, thoughts?

Mike,
Thanks,
I have been doing just that, and have personally visited some of the properties. They are in good working class areas, about 30 minutes from my home. The area had a large amount of foreclosure activity but is starting to stabilize. (I am looking a homes that sold for above $300k in the last 3 years...)

I am mainly looking for an idiot check on the numbers to make sure I was not way off-base.

-Rob