All Forum Posts by: Simcha Davidman

Hi @Louis Friedman and welcome to BP!

Taxes are high, but rents are, for the most part, commensurately high.  Just run the numbers.  You'd have to look in the lower income areas, such as paterson, newark, irvington, trenton, and the like.  Personally, I am not bold enough to go there.  But some people are making tons of money in those areas!

I also am interested in the Phillipsburg/Easton area, but it is a little too far for me at this time.  Hopefully one day.  I've been there a couple times and I really like it.

Good luck!

@Rikako W. Congrats and good luck!  Not to be a downer or anything, but I've read about some people inheriting "staged tenants" who bounce and/or stop paying rent as soon as you close.  I don't know how likely that is, but just so it's on your radar.  I hope it doesn't happen to you, though!

@Account Closed sorry, I cannot answer your question.  But sometimes, if you post at a bad time (no body on the forums, or too many new posts), your post will get pushed down to where no one will ever see it.  So you can use two tricks. 1) after a couple days, post something else in the post to push it back up to the top (like this post, actually); or 2) use keywords that will trigger with people.  For me, I've had success with places, like your city and state.

Good luck!  I hope this worked out for you, but it probably did or didn't months ago already.

@Tim Pagano Thanks for the input.  I was actually thinking about falling rents recently, but kind of brushed it aside.  I'm sorry you went through it, but glad you're still around to teach about it!

@Peter Tverdov That was essentially what I was thinking, but I wanted to run this alternative by the community.  And I'm glad I did.

I guess the caution posed to me could apply to your situation, as well.  If you don't buy low enough, refinancing could be problematic if interest rates rise during the next presidential term.

Thank you all very much for your help!  You may have burst my bubble, but I learned a ton in this little thread while coming back down to earth.  Until my next great idea.

@Daniel Dow and @Katherine Madison, I also have been thinking about this a lot the past little while, which is why I'm reading older posts about it.

I will just add my recent experience. My wife and I are refinancing our primary residence, not for any investment purpose, but to lower our payment by about $100/month. Mind you, we are refinancing with the same lender who is holding our original mortgage and we've been paying for over three years, and they are still giving us DTI hoops to jump through...

Gentlemen, I greatly appreciate your feedback!

@Sam LLoyd If I essentially pay the max that makes sense for a number of years, why can't I have a balloon even without appreciation?  Even if the market runs flat, if I've paid off a chunk of the loan, I should be able to refi, assuming I didn't overpay in the first place?

You may not know the northern New Jersey market, but is it common to make a tenant of a SFR responsible for lawn/snow removal?

@Steve Vaughan It probably wouldn't rent for $3k, but I should be able to get $2,500 for the houses I'm looking for.  And I'm not just targeting any homeowner, but "old people" (75+; no offense to anyone reading this) who might be interested in moving down to where it's warm, anyway.  Not sure if this will make a difference, though...

Also, can you clarify something - are you paying origination, appraisal, PMI, etc. when doing SF? Or are you backing into that 4.25% which would be what you'd get conventionally, but then you'd add these additional things into that method?

My problem with conventional bank loans will be DTI. Not for my next purchase; I can swing at least one more mortgage. But based on the percentages the bank I'm working with wants (43%) I can only qualify for so much mortgage. Then what? Your answer probably will be, "Deal with it then," but I'm just curious how to get around it. Because I'm sure "you people" (read: investors with loads of units) do. I should add that my impression is that rental income would be like self-employed income and not included in the DTI calculation.

@Brent Coombs I only meant that as a way of trying to inflate the price I can pay to lock in a deal, but as Sam and Steven pointed out, the likelihood of getting an owner to carry a 30 year note is slim.  I guess I'll just have to charm them into selling me their houses for my price instead of theirs...

Good day!

I've been thinking more about seller financing and am trying to work through some of its details. Let's say, for example, I'm looking at a SFR with a market value of $300,000, but my numbers don't work above $250,000.

Now, a $250,000 30 year mortgage at 4% would run a little less than $1,200/month, with total payments of almost $430,000!

So, my thought is, maybe I can buy the property for well above market value, let's say $350,000, spread over a number of years (tbd, whatever works), which would equal significantly less than I'd be paying on a conventional mortgage, and would also allow the buyer to feel great about getting a good price.

My questions, I guess, are as follows:

1. How would this type of sale effect the seller in terms of taxes?

2. What effect would this have on my taxes?  I assume that my tax basis would be high (and beneficial for depreciation and upon sale), but i would not have the interest deduction.  But would that essentially be a wash, because I'm putting the money toward the purchase?

3. What difference would it make if we structure it with a lower sale price and interest?

4. What is the (un)likelihood of success?

5. All comments/advice/criticism is greatly appreciated.

Thanks!

@Riley Hinshaw sorry you did not get any responses!

From what I've read, the terms of a seller financed deal is really whatever you and the seller agree on.  Also, the best way to strike up the conversation is to listen to what they need and want, what they'd do with the money, etc., and then hopefully the conversation can flow into this alternative way you can help them.

I like Jay Guttman in Hackensack.