All Forum Posts by: Mike Wallace

Yes I do buy and hold rentals. I just bought a 4plex for 99k under land contract, 36k down the rest at 4.5% 20 year amortization with a 3 year balloon.

Yes you are right, most owners i contact that have their multis listed dont like the idea of a land contract.

Im not looking at single family homes. 2 units and up.

I am looking for private money for rentals.

Whats my best option? I have capital. I have been offering sellers 30%+ down under land contract terms but only a few have liked the idea of a land contract.

I have seen some advertised in my area saying they only do 50% ltv. Is that common practice?

A seller of a 4unit accepted my offer contingent to inspection/lease review. I just received a copy of the leases, only 2 units are currently occupied. One expires at the end of 2013, the other expired at the end of 2009, but the tenant still lives there.

I assume they are month to month? What would you do in this situation?

Thanks.

Any suggestions? What type of price should I be looking at for a 4plex listed at 100k?

I have experience with working class and lower income areas. But what about ghetto, warzone areas. A lot of burned out buildings, people using/selling drugs all over the place, frequent shootings (almost one a week it from my research).

I am looking at a 18 unit that is for sale for 179k. 85% occupied and making some serious money. But i have no experience with these type of areas...

Asking price 99k
Put 20k down= 79k financed

Yearly expenses:
Debt service 30 years at 5%= $5,088
Taxes= 4,357
Insurance= 1,200
Vacancy, 10% of gross rent= $2,500

Gross rent= 25,200. $525 monthly per unit.

cash flow=12,055

60% return on investment.

Working class area, not "ghetto warzone' at all.

I live in Detroit. My location is off for some reason.

I have a few questions about borrowing money to buy income producing real estate.

I just bought my first house (owner occupied). When I bought my house they take your debt to income/credit score etc to see if you qualify. They have to see if you make enough income to see if you can afford the payments, makes obvious sense.

My question is with income property how do they figure debt to income? Will the bank consider "future rental income" as income?

I have 75k in income that I can show on my tax returns with zero debt besides my home that runs me about 1500 a month, that is including taxes and insurance.

There are a ton of opportunities around me for income houses. My realtor has sent me lists of homes that are for sale for 40-60k that easily rent for $900-1200 monthly. In good working class neighborhoods. If I want to get risky there are shady areas within 20 minutes of me that cost 10k-20k and rent for 600-800 monthly.

If anyone can explain the lending process to me and if you can count "estimated future income" it would be greatly appreciated.

Thanks.