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Is this a smart investment , using my home equity?
Posted on February 26th, 2009 3 comments
sparkinharley asked:
this property is all long term renters 6 unit Grossing an income of 35,580.00 …per yr . total Operating exp. $13,500 so there is a profit of 22,260.00 which can pay off my home equity loan in a short time. the property is listed at 139,900 I would offer $105,000 i can get a home equity loan up to 45,000 to cover the 25% down payment which will lower the mortgage payment.
the owner is older women , her hubby has passed away and cant do much anymore. I was assuming this would be a good investment cause I can do 99.9 % of any repairs if needed. I was thinking keeping this investment cause, after the home equity loan is paid off, i ‘ll have additional income to pay off this property sooner all apartment are up to date also so what do you think
CRUZInvesting Additional Income, Apartment, Home Equity Loan, Hubby, Investment Property, Mortgage Payment, Older Women, Pay Equity, Short Time, Smart Investment3 responses to “Is this a smart investment , using my home equity?”
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Timing will be important. As long as you could find buyers it sounds okay. Just be careful in this environment. Make sure you have a good lawyer to figure all the details.
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JohnGalt March 3rd, 2009 at 21:29
How many times are you going to post this? If you can’t make a decision by now, you should NOT do this deal!!
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Lake Lover March 4th, 2009 at 02:54
A couple of concerns to me are: (1) do you have prior experience as a landlord? (2) do you have a cushion of discretionary income and savings to tide you along for a few months in case for whatever reason the investment suddenly turns sour? (3) You should have enough surplus income to make your entire home equity loan payments if some unforeseen disaster stopped all income from the rental units.
The basic figures you provide read like it is an enticing investment. The rents seem low, averaging only $500 per month per unit, which begs the question, is it in a distressed condition or is the neighborhood run down. Still, you think the property might pay off over five years: IF there are no municipal liens against it; IF there are no structural or mechanical deficiencies which must be corrected; IF the rents are all received on time and IF the operating expenses remain constant. There are always a lot of IF’s!
You can not use you home equity to borrow the down payment — the down payment funds should be in deposit accounts for over 90 days before the funds can be used for the down payment. You might be able to make a payment of a thousand dollars to the current owner for her to give you a six month option to buy…
If the current owner is willing to hold the mortgage to finance the sale, you could buy much sooner. Of course, have a title company do a title search, and have a lawyer represent you.
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mac77 February 28th, 2009 at 23:03