I have a great opportuity that just was laid in my lap.  I'm friends with an builder who's wanting to get rid of his last 5 properties.  He will be giving me an incentive when I close on these properties.  These properties will have at less 50k to 60k in equity.  These houses are range from 260k to 375k with note ranging from 1700 to 2000.  I wanting to do lease purchases on these properties if I buy them.  Could someone tell me if I'm over my head or should I take this deal? 

There is a lot of information that you failed to provide, such as where you are, the local market conditions, lease prices in the area, insurance prices in the area, why is he wanting to dump his properties, etc.  You say that there is $50-60K in equity in the properties (I am not sure if you meant in total or each), so why then, would your builder friend walk away from $250-300K in pure profit for him?  If there is $50-60K of total equity across 5 properties then that is only about $10K per house, which can quickly get eaten up with the cost of getting in, floating them until they are leased, etc.  If you cannot lease the houses straight out of the gate, you will be burning ~20% of that equity per month. I am not advocating one way or the other, I am merely suggesting that in order to answer your question about whether or not it is a good deal requires much more investigating.  Also, if you are not that experienced then if your due diligence proves worthy you should consider only picking up one or two; most likely the least expensive of the homes because their appreciation per square foot tends to increase faster than the larger houses (at least in my neck of the woods).

Stricky,   It is encouraging to read your response to this message. I may be somewhat of a novice at investing, (I have only bought 3 rental homes just recently), but You have mentioned some of the Realities of a Deal!

It's very misleading when most of what I read on the Internet, is nothing more than a "Pep Talk" to get one into investing. Hey, I'm motivated, positive, and visualize as in The Secret, 24/7!

 I'm searching these websites for the nuts & bolts of getting passed the pitfalls that plaque all beginners, especially now in 2008 when Lenders are tough on qualifiying anyone, even the long-time successful investors! Finding a Good Deal is Easy, Finding the financing is Tough!! 

Sorry, like I said. I'm a first time investor.  I been reading up on real estate investment, but there is still a lot to learn.  These properties are located in Mississippi.  The market conditions is very low right now, there is a lot of foreclosures.  The lease price in the area is between $1300- $1800 monthly.  The properties has $50-60k in equity each.  My friend is trying to get rid of these properties to keep a good relationship with the bank and don't want to have to foreclose on these houses.  He had a total of 25 to sale and he only have these 5 left.  I have some people line up to lease 3 of these properties now.  Yes, you are right about only picking out two or three of these properties.  I've been praying on the investment and I just want some suggestion on if I should take this deal. 

Will you be refinancing these properties or taking his financing.  You mentioned the notes were $1700+, but you can only rent for $1800 tops.  It doesn't look like you will make any money.  Are you just looking for the market to rebound and pull cash out?   Can you carry them if you don't rent them for the monthly mortgage payment?  Plus he has different insurance than you will get, you need to factor that in also.  In the hurricane belt that could be costly.  You really need to get good numbers and crunch the heck out of them. Maybe he can short sell them to you so you can getter a better monthly payment

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Eight little houses and growing!

www.kruzinkim.com
www.prepaidlegal.com/hub/kaormsby

I will be financing them myself.  No I really want be making any money monthly from these house.  I hope that the market do rebound and I can sell them for the appraisal amount, which I mention which is amount $50k to $60k.  No I can't carry them if I don't rent them.  I'm working with a property management company.  They are telling me that they have people waiting for lease properties.  I walking by faith on these properties.

mccain8877:

I have a great opportuity that just was laid in my lap.  I'm friends with an builder who's wanting to get rid of his last 5 properties.  He will be giving me an incentive when I close on these properties.  These properties will have at less 50k to 60k in equity.  These houses are range from 260k to 375k with note ranging from 1700 to 2000.  I wanting to do lease purchases on these properties if I buy them.  Could someone tell me if I'm over my head or should I take this deal? 

Ok, a couple of things here.  First (and this is the big one), in this market, all equity in real estate is just on paper until you can actually realize it (meaning, cash it out).  Just because the builder says there is equity and even if a Realtor says there is equity, you need to talk to a lender to see if there really is equity there. Also, I am a little concerned about the mortgage figures that you have quoted.  $1700/month for something that is $260k+?  I don't see how that would be- unless you put quite a chunk down.  The numbers don't add up for me.  I would look at the fine print behind those numbers and really figure out what you be getting into before you get into it.  ...Also, can you float any of these properties if you had a tenant move out? 

Good for you for having the nerve to even consider something like this!  The first step in being successful in real estate is learning how to analyze properties as well as opportunities!  :)

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Hi I would like to say it's a nice opportunity grab it, really its a right time to invest money in real estate. Before investing money consider few points in your mind Normal 0 false false false MicrosoftInternetExplorer4 like location, where you are going to invest, development around that place and the chances of future development. All these points will help you in taking the right decision. Hope you like my suggestion.

 

 

 

 

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Hello, I am also a novice at real estate investing. We just bought our first four-plex this year. If these houses are going to be financed, I don't see how the rents will cover the mortgage payments+insurance+other landlord expenses.If you take out 100% loan on any of these houses, each house's P&I would be 1558.83 at 6% (30 years). This is for the lowest amount of $260,000.  Dont' forget that you should always consider 75% of the monthly income and not the full rental amount because of vacancy and maintenance. Good luck. Let me know how things turn out.

 

-Vanna S.

Hi Kim- Hoping that you will please take a look at my deal under "good deal bad deal" forum.  I have all the numbers and location. Thank you inadvance.

kitway 

Hello Friend,

As you said that you have good job, so you are looking place just to invest money not for regular income.

I would like to suggest you to invest money in real estate it will give good returns in future.

Gud Luck!!!!!

 

 

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