All Forum Posts by: John Ching

She's getting raked on her mortgage payment. Refi'd into a 30-fix at 4.0% today would yield a monthly payment of $420/month. 65807 is a mixed zip code but overall has some nice areas. $850-$1000/month is certainly doable for a 4-bedroom. But it better be in really nice condition and have a 2-car garage if you expect that upper range. 

I would need at least cross-streets in order to nail the value better for you. Seller-financing does make this a more attractive deal, but I'm not sure if there is a "deal" here yet as I haven't seen the home.

Austin,

Jason M is correct. $1000/month for rent here in Springfield, while not uncommon, is very much dependent on the size and location of the house. $1200/month? Chances are very slim and you better be in the right neighborhood.

Is $850 her monthly payment or what she wants/month if she seller-finances? $850/month for $88,000 (or less) seems high for a mortgage payment, even with taxes, insurance and PMI included.

If you could post the zip code, sq. footage and bed/ba, that would help us locals determine more realistic numbers for you.

Hi Mosun,

I agree with Manolo D. If you are not a contractor/builder yourself I would say expect to start at $225-$250/sq. ft.  It sounds like you'll be in a good neighborhood which will warrant higher-end finishes. You also mention a specific-style (mid-century, which I love!) so this should also add to your cost allowance. 

Pick up a copy of Dwell or Atomic Magazine (not sure if Atomic is still published?) and go through their advertisers. You'll find mid-century specific agents and maybe even a builder. Also check the builders in Palm Springs, as they have a lot of mid-century homes in the desert.

Best of luck to you. My buddy is a designer/architect/contractor that does work primarily in the South Bay and Westside of Los Angeles, that's where I get my numbers from.

I'm with you, Michael. I don't know why anyone would buy all cash for a property with interest-rates so low. Certainly not investment property that one intends to 'hold' for the long-term.

I mean, as long as the numbers bear out and you are comfortable with them, why not? I had to press this issue with my partner (and future wife) until I took pen to paper and showed her why leveraging our cash to buy several properties with 30% down beats buying just 1 property and owning it outright.

Depreciation? Market crash? Recession? Who cares?! The last crash taught us that rental rates and rents increased during the downturn. As long as your note obligations are being met, you're safe.

But Ryan G above does bring up some good points. An all-cash offer is a great negotiating tool when purchasing property. But once you have the property under control, refi and pull that cash out to do it again. But you have to run your numbers and be comfortable with your strategy.

Hi Tammy. Yes, it can, don't let any lenders/title/escrow people tell you otherwise. 

Happens all the time. It's easier for them to do it with the home out of the trust, but that's the lazy persons way of doing things. You're keeping the home in a trust for a reason. 

My advice would be to call various title and/or escrow companies in your area to see which one of them have handled this type of transaction before. It's been several years since I've had to deal with a trust situation and things may have changed slightly, but it may also depend on the type of trust (revocable, irrevocable, etc.)

Again, work with a title company that can answer your questions and concerns in a clear and concise manner. You'll know who to use based on the answers they give you.

Erika,

A good rule of thumb (since you are an investor) is: "If you aren't ashamed by your first offer, you offered too much". $250K is only about 5 1/2% lower than asking. Besides, you are an investor, who cares if they are offended by your low offer?!

That being said, how strong of an offer are you making? All cash, 15-day close with 10-day inspection contingency is a strong offer. Buyers should go with their strongest offer, not necessarily their highest offer. Who wants a USDA 100% loan closing? Good luck on that!

Have you run your rental numbers? What is your expected rate of return? How much cash are you putting into the deal to compare your cash-on-cash return? Are these numbers acceptable to you?

Overall, it sounds like $265K is still to high? Market movement in south Florida is under 6 months, isn't it? Also, run your numbers and see what an acceptable rate of return is for you.

Nat,

Common sense says approach with caution. Don't let the "steal of a deal" cloud your good judgment. Although not appearing in county records, it looks like there are several other lien holders/judgments against the property.

What assurances does the online portal give you with regards to clear title? Is title insurance available? 

Let us know how you proceed(ed)...

That's a HELL of a profit!

Rented at $695/month vs. 'estimated rent at $1,100/month' - what gives?!?!

Those cash-on-cash returns are ridiculous! No-brainers right there, too bad I didn't see this earlier.