All Forum Posts by: Ed Long

Was curious what type of rates/terms folks are getting for holding a mortgage.  This is the overview of the deal.

Property sell price $325K, (fair price, could resell today at this price)

Down Payment: $125K

Loan Term: 20 year amort. callable in 5, no prepayment penalty

Loan is for $200K.  Buyer is asking for a 5% rate.   

Buyer is self-employed with good credit (750) and tax documentation.  Banks are not lending due to his self employment (C-corp) status, according to him.

Looking for some insight into standard closing cost / fees (on top of the legal, paperwork items) and thoughts on pre-payment?  Perhaps a penalty if it's prepaid before 2 years?  What would a reasonable loan origination fee and penalty fee be?

Thanks!

We were able to negotiate an investor purchase which is a 3 month limit on selling nor more than 120% of the purchase price.  But this is much better than the 1 year ownership clause for me.

Awesome, thanks for the response. I'll review with my lawyer too and reply if there's any nuances that arise.

This has been on the market for 6 months, and has been empty for 5 years.  Not sure the later matters.  My job isn't necessarily stable, and I don't want to be locked in for a year, nor am sure how they track this.  I presume something is filed with the Deed?

Hello,

I'm reviewing the new contract from homepath.com / Fannie Mae around home purchases and holding period.  There is a $10K penalty if you sell the property before 1 year (e.g. must be owner occupied for 1 year).

Would like to chat with someone that may have had experience with this.

Thanks!

Short update. I've submitted an offer that was accepted. Not only was language included to show the apartment during the process, but also for the current owner to sign a lease for a tenant that I've approved.

Best Regards.

Hello,

The one apartment is empty and is almost a mirror image of the other, so I plan to only show the one. I'm very picky about renters and will probably show the apt. a significant number of times, unless I get lucky, and while reasonable notice is not an issue, I like to be very polite to both tenants and owners (which is why I put the time frame in there) , I don't want to be hindered by them not being available. I think I'll add the notice clause in there, but not requiring such.

Cheers.

Hello,

Most of my properties rent from $600to $700/mo and are two families and am about to put an offer in on another one, with similar financials to yours. I calculate about $6.1K expenses vs. $13.7K income (8.3% vacancy). Mortgage expense will run you about 4.5K/yr. (P&I) with 65K @ 6%. (You can probably do better on the rate)

I'd like to see you get this prop at $75K. Cuong's recommendation at $59.5K (which is GREAT if you can get this). I presume you know your area well, and I know that in my area you won't find a prop for sale at $59.5K that doesn't need capital improvements (e.g. more than paint) or is an undesirable neighborhood, renting for $625.

Without any additional details, my best suggestions, esp. because you are managing this yourself is that the property is close to where you live, and has a high demand factor, (e.g. school district, location, quality etc), as well as not taking you out of the market for another property when it comes your way.

Good Luck.

Hello,

I'm close to making an offer on a two family property. I'm looking for advice on additional language to the contract to make my ability to rent the apartments while the seller is still living in one of them. (Understand that this is advice only and not legal consultation)

My initial thought is such:

1. Language in contract that gives me and ACME Broker unrestricted access to the first floor from say 9AM to 8PM. And by appt. for second. (which shouldn't be much if any) Utilities will stay on in the first floor until completion of sale.

2. Listing in MLS for rental unit once contract is signed by both parties

Summary of the deal

Price: 66K, paying cash, move in condition, was homeowner's house.

Two 2 bedroom 1 bath apartments. 2,500 sq. feet total

Great yard, decent location, mint interior, W/D in both units

Expenses ($7.2K/yr)

Insurance: $900

Taxes: $3,100

Vacancy $1,000

Maint: $1,500

Utilities (Water only, tenets pay everything else), $800

Admin: $100

Landscaping: $300

Supplies: $100

Income: ($15K vacancy (7%) deducted from NOI)

Rent $700/unit. $1,400/mo. 16.8K/yr. NOI

12% cap rate.

Thank you.

@henry, your last statement is exactly why I was looking at the larger property, as I have many smaller units and want a more centralized geographic presence.

Thanks for all the input here. In this time I've met with many banks/lenders and attorneys to get up to speed.

Unfortunately it doesn't look like the seller and I are going to meet on an acceptable price. Back to beating the bushes.