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I need some personal finance advice

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Real Estate Agent with realestate.com

I need some personal finance advice (edit/delete)

There is a home i can get for 40k through , a realtor friend, that has been keeping me up to date with a foreclosure in a great mauldin area, I currently live with my parents, I can not get a conventional loan because i Have only been in real estate a yr and a half, doing my research i could rent the house out for around 800 900 a month, because of the size and area. My question is because I cant get a loan, I found an older guy willing to buy it and mortgage it out to me for 400 a month but at an of course higher interest rate of 12 percent, for a year untl I can get a conventional loan, is this a good idea or bad idea?

 

Positives, it would give me a place to stay and posible rent out the other room or two for money,

nice piece of property in growing mauldin area!

after its paid for could bring a great extra monthly income.

 

Any guidance would be great appreciated..

 
Show All Comments
Deanna Casalino
Realty World J. Pavich R.E. - Estero, FL
Fort Myers Florida Homes,

Contact Dan Mitchell Edward Jones Financial. 239-267-2222

He can either help or put you through to someone who can

May 26, 2008 12:07 PM
Sean Allen
International Financing Solutions - Fort Myers, FL
International Financing Solutions

It would depend on your total cost to own the home...Mortgage payment + Property Taxes + Insurance + other costs. I would guess these added up comes to roughly $600 to $650 a month. If you rent it for $800 a month that isn't much profit. Also, do you have reserves to cover for repairs and unexpected problems or lack of rent when vacant or a non paying client?

It is a tough decision to make, but at least do the math.

Sean Allen

May 26, 2008 12:54 PM
Jimmy McCall
JimmyMcCall.com - Cunningham, TN
The Ex-Mortgage Consultant

Jason, I think sometimes people get caught up with interest rates.   Rates are the least of your worries.  After all it should be short term and is only $40,000. There are a lot of other things to consider to this deal.  I have bought a few owner financed properties with high rates because it made sense.

  1. First and for most will the property be registered with the county clerk in your name or the other guys name?  (pros & cons to both ways)   
  2. How long will you actually live in the property?  (Remember the 2 year capital gains rule.)
  3. Can you afford it? (payment shock, utilities, taxes, insurance, maintence, commute, etc.)
  4. Consider future financing.  (Refinancing is becoming harder, make sure you will have equity to refi in the future.) 
  5. Is this property in a good area for future rental or sale?

There are several more things to consider with any purchase.  If you would like my opinion on any of the topics I will be happy to discus over the phone.  Give me a call 931-624-0266

May 26, 2008 12:54 PM
Jason Robu
realestate.com - Mauldin, SC

thanks fo much for your input guys, you are the best I hope God sends a special blessing your way

May 26, 2008 01:39 PM
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