All Forum Posts by: Mike L.

@Joseph Lyons

If you are set on doing a cash out refi, I’d do the 3 year term. As the other guy mentioned, for a cash out, you’ll certainly be required to have held the property for 2 years.

If you don’t have to cash your money out, that 20 year term on a 25 year schedule is really attractive (if you can get this on a refi, do it). It’s attractive because towards the end of your 20 year schedule you’ll be paying your principal down much quicker at the beginning. You may even ask for a 20 year am schedule and 20 year term so it gets completely paid off.

@Theresa Reynolds

I read most of the replies but it looks like you are getting bad responses and bad advice. It’s a pretty simple answer. Yes, if you didn’t terminate the contract and have delivered on the contract terms to date, you are still under contract.

If you agreed in writing per the contract that a condition to closing is that he would do certain work on the house prior to closing, then he would be in default if those items were not completed on time. You could sue for specific performance (the threat of suing would probably get it done)

If him fixing the house was not in writing, you either need to close or drop the deal.

@Kevin Tunnell

Hot take:

I would buy the most expensive home you can afford as long as the rent numbers pencil comfortably. Reason 1, your principal pay down is going to be larger each month because of the current low interest rates. 2 because you will be living in the house, you can put very little down ( I put 5% down, repped myself, and negotiated a buyer credit so I only came out of pocket about 1%). These points are true of any priced home, but when you can put such little down, I’d stretch as much as you can.

The primary house loan is very powerful and should be taken advantage of by young singles often. I can no longer jump around as much getting primary home loans because my kids are getting school age.

@Mary Jay

Fulfil your side of the contract by going to the title company the day of closing and wiring your money to title. If seller doesn’t show up, which I’m 90% sure they would, they will be in default. You can file a lis pendens on the property and the seller won’t be able to sell it to anyone but you at the price your contracts states. Ideally, he doesn’t go through with the sale and you sit on your “option” for years while the property appreciates. (I think you could get your money back from title if he defaulted but still have the lis pendens on the property).

All in all, you’re in a good spot assuming the contract has specific performance as mentioned by others. Sit back and relax

@Delbert Standifer

Wow, if you can get $1600/month on a house that sells for $90k, you’ve found the goldmine. I’ve honestly never seen that, but then again I haven’t seen everything. Looks pretty juicy. I’d be skeptical of those numbers though. In Dallas, if a property can be bought for $90k, then you probably can’t even rent it.

If those are the true numbers, you should ask if you can buy more of his. Haha. You can’t really mess up the financing when you are getting rents that big

@Delbert Standifer

Hi again,

If you are nervous about having debt, then all cash is obviously you’re only route. It just negatively affects your Return on Investment. There is a Bigger Pockets article that just came out weighing the pros and cons of debt purchases vs all cash purchases.

I’m not sure why you haven’t given us any numbers yet. That is where you will be able to make an easy decision or let others help you make a decision. If you don’t know how to get those numbers or can’t get them, you have no business buying the property. When you say it cash flows $1,200, what does that mean? Is that the gross rent? You need to subtract property taxes, insurance, maintenance, capital expenditure allowance, and your note payment. My guess is you won’t be making any money. But if you buy it, you’ll learn a lot! Ha

@Delbert Standifer

I’m with the others. Doesn’t seem like a “no-brainer” purchase. That’s for sure. You could take the $45k and easily buy something worth $180k which, in theory, should have better rents and you’d have a lower interest rate and a longer amortization schedule/term. The more I’m thinking about this, the more I’m thinking you need to ask yourself if this guy is really your “friend”. Seems like a terrible deal. I don’t have all the facts, but you can do a lot better with your $45k.

Might be hard to hear. Maybe post all the numbers: What each side of the duplex rents for

Property Taxes

Insurance

Estimated repairs

What are the details on the promissory note to your friend?

$45k note

7 year term. What’s the am schedule? Is it a balloon payment after 7 years?

@William Coet

You need to go to a new market where real estate appreciates. ;)

@Mike Girenko

What kind of terms did you get? I am in the same situation.

@John E Ceisel

I’m looking at the same problem. John, did you get a 30 year note on this? Do you mind sharing the terms?