All Forum Posts by: Slaughter Paul

I’m planning on house hacking a duplex for 185k. However, I have a dilemma with choosing the best loan option. I plan to move out after one year and put someone in my unit. My goal is to own the property long term.

Option 1: 15% down @ 2.625 closing cost is 6100

Option 2: 5% down @ 3.125. Total cash to close $14,750-$15,500. This depends on the current rate and if the bank pays any closing costs. This number consists of your 5% down payment, closing costs (title fees, appraisal), and prepaid (homeowners insurance and property taxes). PMI would be approx $53 a month. All of this depends on my credit score.

P.s I was able to get seller to split closing cost.

Thanks for help!

Welcome to BP!

 Thanks for your advice. I will apply it when I'm negotiating the deal. I truly appreciate input. 

According to the seller, he bought the house at auction but don't want to deal with it right now because he got other properties in front. As for his experience with owner carry, he mentioned doing 15 or so deals with each one being a little different. He is asking for 3000-5000 down payment that will go towards the purchase price with 7% interest which he said could be negotiated. After that I can do neither interest only payment or interest and principle depending on how much I want to pay monthly. He will structure it from 6 months to two years and have a balloon in the end. However, if I need time to sell or refinance he will work with me (I will have that included in the contract of course). 

 Can you please elaborate?

I came across a three bedrooms, two bath single family property that I believe needs about 30k in rehab. The seller bought the house at auction but do not want to deal with it right now because he got other properties in front. He is asking for 65k with a seller financing option. My next step is to visit the property and take as much pictures as possible to have a contractor estimate the rehab cost and timeline before making an offer. After doing my due diligence, I found 10 similar properties on Zillow with an average sale price of 114k. My strategy is to use the BRRRR method for this property but I don't know the ARV of the property. However, Zillow estimate the house at around 105k.

How do I negotiate a favorable deal? What to look for in a seller finance deal for someone who has no experience?

 Thanks for your input @Stephen J Davis. I really appreciate it. 

How to identify a good private lender when you are new to real estate investing? 

My required margins are 12% or more COC. At least $100 per door cash flow on duplex, $200 per door cash flow on single family. My long term strategy is buy and hold single family and multifamily rental properties. 

Here are the numbers:

with PMI and low down payment (house hacking)

Purchase price: $170,000 | Closing cost: $2,500 | Down payment: $10,000 (5.9%) | PMI: $67

COC: 16.56% | Cash flow: $310 | NOI: $985

no PMI and high down payment

Purchase price: $170,000 | Closing cost: $2,500 | Down payment: $34,000 (20%) 

COC: 7.70% with management fee (10%) | Cash flow: $298 | NOI: $871

COC: 12.36% without management fee| Cash flow: $478 | NOI: $1052

I put an offer of 170k that was rejected. The property has been on the market for months so I’m hoping the selling will eventually start entertaining lower offers on the property due to everything that is happening in today’s economy. Besides, my max is 170k and I’m hoping to be in the first of the line when he does.