Ready reserve on your checking?

Mom/Dad?

Best friend Bob who has managed his money well?

I wouldn't do it unless I had 20% down of my own money saved up. You never know how long a unit can be empty and you should have money ready for that. --170.215.45.222

You’re so close I would jump to a credit card…..but, that is not the best advice. I just like credit cards.

Here is another reason you are so close.

That third loan (8) would cost you $61 per month and it would certainly also balloon. So Mortgage A, plus investor loan, plus 61.

If you cancel out the investors and just go for the 10% down, you would pay about 60 in PMI. So mortgage A, plus $66 added to A (10% more), plus 60 PMI…,but no balloon. If you could get rid of the PMI in a couple of years you would be better off.

If the investor were to increase her/his amount by 8 then the difference would be $62. So mortgage A, plus 150 and a balloon.

These are off the cuff numbers, I’m speculating on a number of points. Yet if you check them they should be close. What I see is that you’re so close that I’m not certain the investor helps by only coming in for a portion of the balance. I would keep the 3,000. Pass go, pay PMI and check if the value of the property will merit getting rid of the PMI in a couple of years…….and of coarse…no balloon payment. Balloon payments are going to be tough in five years.

If you’re thinking of selling the place in the near future, all bets are off. I would return to the credit card. (again, risky but it is the cheapest way to carry a project until you have the mortgage of your choice.) (I should comment, risky when used poorly…some credit cards are now going 0% for up to a year….you need only a couple of years of juggling balances and applying your monthly cash flow….remember, if you took all your profits and put them on the CC balance and suddenly needed a Gutter-ectomy, you could advance on that card to get you through the repairs. –again, not as care-free and easy as it sounds.)

Get the seller involved if you can. More posts on that to follow.

Value of the house is key here, check and double check that first. --64.12.96.40

Let's analyze this for a minute. Let's say you pay 109K for this property & you put down 10%. That means you have a loan balance of 99k. Your principal & interest payment on this alone is $761.31. Insurance will run you another $75 or so. So now we're up to $836. But we're not done yet. What about property taxes? Let's say that runs you another $100/mo (probably more). That puts you at $936/mo. And we're still not done yet. What about vacancy & maintenance? Let's say $75/mo for that. That means that if all goes well you will have a total pmt. of around $1011.

Unless there's built in equity in this deal of at least $10,000 minimum (preferably $15,000), I don't see how you can make any money on this deal.

Vic --64.12.96.40

What interest rate did you assume? Your ins assumption is way too high. Might not be a good deal but here are the real numbers from my analysis.

1st of 87,600 at 7.0% is 583/mo. 2nd of 10,950 at 8.0% is 81/mo. Taxes is 68/mo and ins is 30/mo. HOA is 30/mo. Then I subtract vacancy rate of 5% and throw in expenses like advertisement, management (me), supplies, maintenance, reserves, legal, accounting, utilities.

I come up with Adjusted gross income of 10,887/yr minus 1931 (expenses) equals net operating income of 8956. I then subtract my debt services of 6993 and 964/yr. This leaves me with about 1600/yr before taxes.

This is just what the numbers ar in the first year. Assume the gap would get bigger. --208.59.157.11

After purchase, remember to up your deductions at work so that less $$$ is being deducted because you will have beaucoup deductions from rental property in 2003.... --64.12.96.40

I was figuring 8.5% for the whole thing, with you putting down 10% (numbers rounded off). Didn't realize that was for 2nd only.

I agree with Kurtis on the insurance. $30/mo is low. Ins. here is a good bit higher.

Vic --68.11.90.125

Weigh the following:

.I hope you currently have a tenant and lease - if it expires within the next year - you must verify you have cash to cover a few months of repairs, advertising, etc.

.Did you incorporate closing cost as the down payment is one thing but you still need closing cost.

.The real estate market is in a questionable zone as it is uncertain whether the price of homes will burst or continue to rise due to the economy. This is critical as you may purchase a home with less 5% equity and realize your home isn't worth what you paid for it within one year.

If you feel rush in this deal and the seller isn't offering major financial incentives I would past.. Additionally, I would purchase a paper in the area and view how many other similar properties are available which can tell you whether it is a hot market or not. --162.83.165.248