Would like some advice on my first pending deal...

Would like some advice on my first pending deal...

Hey everyone, I was wondering if I could get some opinions on a scenario I'm considering. This would be my first deal and it would be to buy a property and rent for cash flow. To get started, I may have to fork over 3% - 6% of the loan just to get a mortgage. I have good credit (over 700) but apparently the lenders my broker use may not budge on a down payment; and they have over 40 different lenders. I've also been told with the current market and new mortgage policies, I can't take out on the equity right away. Since using equity to refurbish isn't an option, I was planning to ask the seller if they would be willing to fix up the property prior to me buying. This way, I can immediately rent the property out. I was also going to ask them to pay a portion of the closing cost. In return, I would offer to pay a little more than what they are asking. Otherwise I have to use my own funds for the down payment, closing costs, and refurbishing to rent out. I'm not worried about getting a tenant because the demand here is really high. I will also be leaving for Iraq in a few months so replacing my own funds wont take to long. I will be back home in 6 months with about $15 - $20k in non-taxed income to invest plus I should be able to refi my property by then. But if a severe issue comes up before I leave, it may tap me dry even with my credit. Any comments on weather the risk is worth it getting into REI? I know the first deal is the hardest, but this looks like the most plausible scenario for me to get my foot in the door. Hope to get some input and thanks for reading my long winded message. Smiling

Also, by any chance does anyone know if the income I will make on the house is non-taxable while deployed as well? I know all regular pay is. If so, it would be a great time for me to flip.



First of all, let me say thank you for the service and the contribution for the safety of our country. I and i'm sure a lot of us in here appreciate the work you, and our young men and women do to protect the freedom and warefare of this great nation. So, thank you!

As far as your first deal, if the lender refuses to do anything you're asking for, then i would recommend to do a lease option. In that case, since you mentioned that you will be leaving for Iraq, that will give you time to come up with the dowm payment or better yet, the tenants will be paying for your new house.

By doing the lease option, you would only come up with 3% of the down payment or two or three months rents of whatever you'll be renting for the house.

I also want to point out that if you do decided to do a lease option, make sure that you agreed on the price in today's market and with two years lease option. The tenant will take care of your payments and make sure the payments covers the note, insurance, taxes and hopefully with some cash flow.

I hope it help, and i'm sure some investors in here could contribute to your situation. Good luck and be safe out when you leave for Iraq.


Thanks for the info, I've

Thanks for the info, I've thought about the lease option but need to look more into it. However, main dilemma is how I'm going to refurbish the property for tenants after the property is purchased; especially if I have to pay a down payment, and closing. That is why I was going to ask for the seller to fix up the place prior to purchase as well as pay a portion of the closing cost. I was also going to ask for a refrigerator and stove for the next tenants as well. To motivate the seller, I would offer a little more than the price they're asking. That way, all I pay out of pocket is the down payment and maybe a small portion of the closing cost. I'll be investing my own money upfront, but most will probably be credit. Also, I wont get any extra money in the end to invest in more properties. The base here is about to go through a dramatic change. Plus with the re-election, I think it's possible the market may go up. I wanted to secure at least one property prior to leaving for Iraq if not two. My question is, is this a good idea albeit a little more risky?

I Agree with LL-Lloyd

Being away for 6 to 12 months tdy (former 18-bravo) 1968-1976 could cause a problem for you with your renters if an issue arises.Lease option would be the way, being that the renter now becomes responsible for the maintainence on the property, and also would bring you a higher monthly rate as opposed to a buy and hold. Offering extra cash by way of final price might bring you very close to your breakeven, and you don't want to kick in extra $$$ just for the sake of owning the prop. Taxes almost always go up every year. So this might be an extra couple of issues for you to think about before you go tdy. All the best to you, keep your head down and don't be a hero...God Bless....Jan

Hi Rob!

First, let me say welcome to the DG family, as we call it, we are happy to have you here with us. Second, let me also say a BIG thank you for your service to our country in the Air Force, we all appreciate what you do so we can enjoy our freedom! Do you have a property manager that's going to take care of this property while you're deployed? If not, then a lease/option would absolutely be the best way to go on this. Also, ask the owner for all appliances, to pay for a home warranty for a year and closing costs. If they want to sell it bad enough they will say yes to all your requests. There are too many homes sitting on the market to get stuck on one where the owner's NOT motivated enough. So don't be afraid to ask!
God bless you,


Cool Elena Cool
Psalms 118:23 "This is the LORD's doing; it is marvelous in our eyes."

Yeah, I forgot to mention

Yeah, I forgot to mention that. The broker works hand in hand with a PM company that is also a Realtor, and independent contractor. So basically I'm working the basics all under one roof which is pretty darn convenient. I've crunched a lot of numbers and the PM company taking 15%, I should still make a profit from it albeit smaller. I don't mind if it's a smaller profit so long as I finally get started in the industry.

Also, as far as taxes go, the parish actually voted to lower the mill rate on taxes this year. It actually ends up breaking even so property taxes this coming year will stay the same with inflation. I figured with the local rent, PM company, insurance and taxes; I should still make a profit even if I have the mortgage under my name. That is, if I can get a house for the price range I'm looking for...

I am ready to buy my first

I am ready to buy my first investment property and have found one in my price range that I could buy & hold and rent out. The only problem with this property that is making me very reluctant is that first it's listed as a 3/2 but the upstairs is like an attic type with 2 of the rooms having very low cellings. One of the attic like rooms is extremly small and its celling is like an A shape. And the other issue is there is an added bonus room at the back of the property that seems to be built well however I am not sure if it is permitted. if its not will i have a problem with that. i hope this is not thread jacking do i need to start my own? not sure

if they are still avail

hello and i too would like to thank you for your contribution and service in the air force.we all truly appreciate your bravery.i am in no way a learned pro having only completed one deal myself,but i do know of a program that may help,if it is still available.i beleive it is a hud program.it is called a 203k mortgage that is for first time homebuyers, and it allows the purchaser to aquire money to purchase a property as well as money to rehab/refurbish all in one package.i guess it is something like a hard money loan except with better rates and a higher loan to value.if you are allready a homeowner there is a similar loan for investors which i beleive is called a 203b that is also through hud.hope this helps and again hats off to all who serve to protect all freedom and the pursuit of happiness.be safe

hey cthaxton....

be VERY cautious with this property....sometimes realtors will Not list the property correctly, on purpose!, because either, they agreed to list the property @ a price that would never work(just cause they wanted the listing), so they list it like you said, to pull buyers in.....so just be aware that your probably looking @ a property thats a 2/2, which are also harder to sell, compared to a 3/2, and in turn effects the value of the property, so take that into account. By the way, in terms of the "permitt thing" I cant emphasize this enough..make sure it has a permitt!, cause if it dosen't your going to have to apply for one, and guess what? theirs no guarantee that it will be accepted!, so that could be another problem all in it's self.