Hello BP,
I'm new here. I've been reading the forums for a couple of months and now I need a sounding board. I'm new to real estate but not new to business.
My wife and I found 2 duplexes in the suburbs of Philadelphia. They are near each-other separated by a driveway and fully rented.
Everything was going swimmingly with the negotiations, we brought the seller down to 600K from 700K, we went under contract yesterday and now the mortgage guy is changing his tune. He initially assured us and our Realtor that we could get the 2 properties for 10% down each (one as owner occupied and the other as investment). Now he is saying that he didn't say that.... long story short, the best he can do is 10% down on the owner occupied and 20% down on the investment. The problem is that we don't have enough cash for 10% and 20% deposits. We were comfortable with 10% and 10% down. A lot of lessons were learned through this process.... I'm gonna write a blog about this once it's all settled.
We are now presented with the following scenario:
Property 1 (Owner occupied): SP 350K on an FHA loan with 3.5% down @ 3.875
Property 2 (Investment): SP 250K on a 30yr fixed with 20% down @ 5.5
Cash needed for closing = 90K
Monthly mortgage payments = 4200/month (includes taxes, insurance, mi...)
SP for both properties = 600K
Rent generated = 4700/month
Utilities = 1000/year (utilities paid by tenants except the water in property #2)
Insurance = 2000/year
Appliances insurance = 1200/year
Property tax = 10400/year (for both properties combined)
The question is: Is this still a good deal? When I ran the numbers it looked like I would be breaking even every month.
Since we were under the impression that we were getting 10% down on both properties the AOS was written that way. At this point we can get out of the agreement and cut our losses to the cost of the inspection.
What do you guys think?
