Posted by Ed Garcia on November 11, 2009 at 01:45:25:
In Reply to: FOR ALL CREATIVE ideas. How would you do this? posted by luisgoodchevy on November 10, 2009 at 23:02:05:
Hi Luis,
I hope things are going well for you.
The first thing you have to know is that buying a house is not always an investment.
As an old friend of mine named Jim Piper once said, “to buy a house as an investment, you must disassociate yourself from the deal emotionally and the numbers as well as upside facts such as location etc govern your judgment as to if it’s a deal or not”. Bottom line, the numbers tell us what to do.
If it’s a house you choose to live in, other criteria enter into the deal such as location, how far it is to work, schools, kitchens, bathrooms, floor plans, etc.
As an investment I buy with two premises. (1) I make my money on the buy. (2) It must cash-flow.
If either of those elements are not there, I move on.
With the information you’ve given us in your post, your numbers or property values are all over the place, so let’s just nail what we need to do down. If you are serious about doing this deal get the property appraised. You don’t buy anything without knowing its value in relation to market.
You also don’t tell us what you can afford or anything about your financial strengths credit, income, cash down etc. Therefore we don’t know your financial capabilities. You tell us that he wants $2600 for rent, but don’t tell us what you can afford to pay.
For example if you were to buy the house for $850k on a lease/option and 3 years from now financed it at 80% which would be $680k as a jumbo at lets say 6%, your payment would be $4077 per month not counting taxes and insurance, are these numbers you can live with? That’s assuming interest rates don’t go up in 3 years. There’s just too many things we need to address.
Luis, there is not enough information here for us to properly advise you. If you like, you can call me at (909) 944-0199 and after a few questions I think I can help you see what you need to do that will be helpful to you and not just generic information that won’t be applicable to you.
Ed Garcia