All Forum Posts by: Michael Digman

I'm in talks on a fourplex and I wanted to see what everyone thought of the numbers at this point and possibly any advice on what I can do to make the numbers betters.

The owner has a bank that will finance 85% for 5.5% 30 years.  He will then give a 2nd on 10% at 9.5% for 5 years.  I would then put 5% down.  The asking price is 310,000.  

The numbers:

1st 85% $263,500 5.5% 30 years $1496

2nd 10% $31,000 9.5% 5 years $651

Down 5% $15,500

Rental Income $2900

1st $1496

2nd $651

Taxes & Ins $325

Net Cash Flow per month $428

I like the deal because I'd only have to put 5% down, but I don't think there is enough cash flow to offset vacancy and maintenance.  Not to mention if I need someone to manage it for me down the road.  On the other hand if I can hang in for 5 years I've got a pretty solid cashflow I think.  I'd normally try to cash flow 200 on rental house...is it good math to try to assume that I'd want to do the same on a multi family? So 800 on this fourplex? What can I counter with to make this deal look better for me?  Thanks!

Some great info on this thread!  One question I have that I keep seeing everywhere and don't quite understand is the concept of leverage.  I assume this means that he would take the money and for example put down 20% to get a mortgage on a house.  That way with 100k he gets 5 houses instead of 1.  Then as he mentioned the spread is less because you have mortgages.  So my question is why everyone comments about being worried about the downturn and that affecting the situation I mentioned.  Assuming the rates are fixed what could change? Rental rates don't typically go down in a bad economy right? Or at least not much.  So maybe the spread gets a little tighter each month, but that shouldn't be a problem that would cause you to lose a house unless your spread is already so thin and you just got into bad deals. 

That sound fair? I use this strategy and I'm looking to use it more so if you guys could help me avoid any future land mines that would much appreciated. Thanks!

thanks Tom. Now...any idea where to find these people? 

Yeah, I'm aware.  Not planning on showing my hand.  Just the one sales piece.  Not marketing, not contracts...just call them talk them into it.  Pass the details on.  Next.  That's how it would work in my head anyway :D

I'm looking for someone that can help me return calls on direct mail leads.  Has anyone ever tried to hired a salesperson? I'm not looking to qualify the leads.  I'm looking for someone that can actual close a deal.  Any advice on where I can find this type of person? Would be great to find someone with sales experience and real estate experience.  

Apple maps doesn't even acknowledge its existence so I think our LR is safe in its world class fame. 

Any experience with Realty Title on anything creative?