Hello Everyone,
Currently I am in process of buying my first Invesment property ( a Condo, 1 br, 2 baths for $148000, HOA is $170 pm) which is located at a very good location. My goal is hold the property for a long term, may be 5-10 years and, make a good cash flow. The property is in good condition and seeing less maintenance over the years.
So initially I was going with 30% fixed conventional loan with 25% down payment. During appraisal process, Lender told me that they won't be able to finance the condo as the condo is "non-warrantable condo". that gave me a shock and didn't know of this. There is a company which is currently occupying more than 50% units there that is the reason.
The lender told me that the seller/seller's agent should have disclosed this in the contract before even inspection was conducted.
The lender advised me to find another property (specially SFH) or find another lender who can give your portfolio loan which they mean was ARM 5/1. But even though today I go with ARM rate then after 5-10 years I plan to sell this property, it won't be easy to sell this out, or have to sell it for cash and less, right?
I have couple of options.
- 1. Find another property and lose your $1000 (inspection and appraisal)
- 2. Find another property and file a case of mediation or litigation with the seller to recoup the loss, though there is less chance I am doing this, its just a waste of time.
- 3.Have another lender to finance the property through ARM 5/1 and repayment within 5 years?
(Today I got to know the interest rate for conventional 30 years fixed is 6.99% and, for ARM 5/1 is 6.87%. Though closing cost for ARM 5/1 almost 50% cheaper than conventional 30 years fixed)
4. Use HELOC to pay 75% off the loan amount, Pay $0 closing cost, then refinance with-in 6 months to pay off HELOC through portfolio or ARM financing once the rate goes down.
please advise.
Thanks
