All Forum Posts by: Josh Nabors

199,000 with 3.5% down FHA 30 years @ 4%

PI -950

Taxes - 200

Insurance-200

 Care to elaborate for educational purposes?

I have the exact PITI but was using a higher number to soften the numbers.

The owner pays utilities in the common areas and heat. 

Side note. They currently have a gas protection plan that protects the appliances that they pay 120/ month for. So 1440 *could* be subtracted from each yearly expense. I am trying to find out what this protection plan entails. 

First time home buyer and long time lurker of these forums. Over the last few months I have been active in the local real estate market evaluating deals and trying to find my first purchase. I think I finally found a good opportunity but would like some assistance to help evaluate if my math/thinking is correct .

The area that I am in is over saturated with investors due to the Destination Medical Center plan proposed by Mayo Clinical Hospital. This long term expansion should double the current population of 120,000 and stimulate the economy with more businesses. Mayo Hospital employees nearly half of the city with new residents, docs, nurses, ect coming every day to work. The rental market here is insane! Vacancy are very rare.

I would like to purchase a multi-family property with an FHA loan so I can owner occupy. This will allow me to live free or close to it and then I can focus on getting out of my student debt as I live for free. I am a recent college grad.

I found this four plex through my works employee classifieds. This four plex is not listed with an agent or on the MLS.The listing price for the four plex is 210,000. Over the last few months , I have seen similar style four plexes sell from 200-250k. I have offered 199,000 and he has accepted but conceded that I might have to help with some closing cost. The seller states that with a full offer price, he will completely cover closing costs. He is also willing to make repairs so the house will go FHA ( just paint).

The four plex was built in 1980. It is located on a street with about 20 other similar four plexes . The location is good. Two of the units have been recently rehabbed, two others could use a rehab. However, the units that could use a rehab have had long term tenants of 5+ years. New roof and windows in 2014.  All four units rent for 600. Similar units in the area rent for 700-800. He has not change the rents on the unit in 10 years. The laundry also makes about 100/month

I am pre-approved and ready to make a purchase. To be generous, I am calculating my PITI as 1,500 a month.

I am starting to receive income/expense reports over the last few years. Here is what I have so far. 

2012- approximate numbers
Income-$29,247 (rent + laundry)
Expenses- $6,162 (utilities + services(snow removal))

2014-approximate numbers
Income- $29,612 (rent + laundry)
Expenses- $7,324 (utilities + services (snow removal))

These numbers are using the 600/ month rent. With a light rehab, I believe the units could easily get 700/month. The 1500 a month PITI is probably really generous on a 200,000 loan but I would rather shoot high. The plan would be to refinance once I get 80/20 with either earned equity or additional capital so I can get rid of my PMI and increase my cash flow by about 200.

Thoughts?

Thanks for the advice. Thats what I was thinking I would do, but I was a little concerned that my agent didn't have any advice on this situation. The only thing he mentioned was that one time the seller lowered the price to accommodate. I was referred to this agent from several people so I was confident I was in good hands but maybe I need to re-evaluate. 

First and Foremost, I want to thank everyone for their help in this long and educational process. 

I am currently in the process of buying a Duplex that has been partially rehabbed. The property needs painting and new windows, thus, the 203k Loan. 

The asking price is 86,000. I offered full asking price + cover closing cost. According to my agent, the seller is not wiling to budge. 

My question-

I am worried that the appraised value might be close to the purchase price + rehab price. I understand that the 203k allows up to 110% of the appraised price. What happens if the purchase price+rehab price exceeds the the 110% appraised price once a contract is signed?  It is my understanding that I will be responsible for the difference...is this true?

Is having the property pre-appraised my only recourse? Is it possible that my lender will use this appraisal? 

I don't want to get each property pre-appraised because that obviously will get expensive but I also want to be able to walk away from the deal if the numbers don't work out. 

I am a first time home buyer. I am just looking for advice so that I don't end up upside down in this deal.  I am okay with paying up to 110% of the appraised value but I don't want to have to cover the difference if the rehabbed value is 130% of the appraised value. 

I have a question concerning a land contract/ subject to deal.

I will be proceeding with one of these deals, however, I have a question. She is "selling" the house to me for 75k but currently owes 98k. Essentially, I am land contracting a short sale. Whenever I buy the property in the next 2 years,  will I own it free and clear even if she owes the difference still?

What sort of things should I be on the look out for? 

Will a subject2 or Contract for deed require me to acquire a new loan when I am finally able to purchase it? Will have to come up with the 20% down and have my credit scores appropriate in order to qualify?

I am looking to move into this property on either  lease to own, subject to, or contract for deed. The place needs work and I plan to work on it while I am living in it. I would hate to get screwed out of the money I used to rehab it if I am unable to qualify or come up with the 20%. 

My very last back up plan is to rehab it to FHA standards and then purchase it with 3.5% down. But I would rather assume the original mortgage and not have to come up with a downpayment/closing costs.

How can I protect myself with the money I used to rehab it if this deal goes south?

I have found a property that is in need of some work. The seller is VERY motivated to sell and hasn't been able to make the mortgage. Unfortunately, I don't have enough to have 20% down. However, I did qualify for the FHA loan and FHA 203k loan. With that said, it kills me to pay a general contractor to do the work that I am capable of doing.

With that said, I would like to explore other options of purchasing this property. I have heard of "land contracts" and such. 

I have thought of offering to pay the mortgage if I could move in the property( It is vacant). While living in it, I could fix it up myself with the money I would have used as a down payment ( 15,000) and I would essentially be paying her mortgage. How does this work?  Can she add my name to the deed? How do I protect myself so that I don't screw myself? For instance, I rehab the house and she kicks me out and sells it?

I just would like to avoid paying a contractor to do the work I can do, but I just don't qualify for a conventional loan yet. 

Thanks for all input!