All Forum Posts by: Derek B.

 If you have a city to recommend, how about providing some supporting evidence rather than just promoting your rei club.

 Welcome to BP.  Glad you are here.  Clarify for us which offering is on the table:

1.  He owns free and clear.  He will hold the note and deed will transfer to you.

2.  He has a mortgage and you are buying subject to that mortgage.  From your initial post, I don't think that is the case but wanted to clarify.

3.  He has a mortgage and is not paying off the mortgage. He is creating a new loan and "wrapping" it around the existing mortgage.

Others can chime in as well, but if #1 is what is on the table, then there are not a lot of risks. He is financing the deal rather than a bank. Since you want to refi in a year or so, make sure there is no pre-pay penalty.  The owner may be looking for 20+ years of retirement income from the note and therefore may want a pre pay penalty, so just make sure he doesn't include one.

If #2 is on the table, then the bank could invoke due on sale and call the note. Lots of discussion here on the forum about that.  Do your due diligence.

#3 is the only option I can think of whereby he could "not put the $ where it belongs" and you would stand to lose.  I can't offer an opinion on this strategy but would consider it the least ideal way for you to buy. Others can chime in if thats what he has put on the table. 

Good luck.

@Thomas Mark  welcome to bp. Great to have you here. 

@Bill Sargeson  wow, great progress in a week

@Sheena Varghese  Whats your purchase price? I could reverse math to figure it out but don't know the interest rate on the seller carry.  Can you pass on the utilities to the tenants? Are there separate meters for everything?  How would you really grade the area.  There's a lot of space between "fair" and "war zone" so try to narrow it down a bit. Example:  why would someone on a 650/900 budget choose to live there? Would you live in that area if that was your budget?  The grade of the neighborhood and the resulting applicants/tenants makes a big difference. You don't have allowance for property management so I assume you are managing yourself. You should consider a capex funding in addition to repairs. 

@Mike H.  applicant B has one income, is relocating to the area and will have a 2nd income shortly.  This is very common when the family relocates for one spouse's job and the other spouse finds new work after they are settled.  I would not be concerned with that.  It sounds like both are solid applicants.  Gut instinct:  who will stay longer, take better care of your property and not annoy you?  Thats who I would go with. 

@Drew Wiard  this may be something an ozone generator would take care of

I'll vote for Erie ins.  I have everything, including rentals and umbrella with them. I have never had a claim on a rental property, so I can't speak to their claims service there.  I did have a total loss tree on a car and my dad had a roof destroyed in a storm. We were both happy with their claims handling. Go to their website and search for a local agent. 

@Vince Wiley  welcome to BP.

A few things:

1. Is this a rental or personal residence? You will have to occupy it initially to get an FHA loan.

2.  If you can put down 10k, consider a dIfferent loan product.

3. I don't know your area, but make sure there is long term demand for a 2/1.5.  There will not be as much demand for it as a 3/2, but there still may be plenty, so double check it.

4. (And this should have been #1) - make sure your numbers work and know all of your costs. Repairs, vacancy, capex, turnover. These things happen. They may not happen every month or every year, but they do happen. Cash flow with rentals is not rental income minus PITI.

Once you account for all of your costs, I think you will find that there is little/no cash flow left.

@Andrew Davis  i get it in an email.  Here's the iphone screenshot.