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JOAQUIN
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.
LEONARD
How many times are you going to post this? If you can’t make a decision by now, you should NOT do this deal!!
JARRETT
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.