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Trash is usually lumped in with your water bill.

I got into a house with $0 out of my pocket.

I did an 80/20 loan (2 loans) to avoid PMI, and I negotiated that the seller covers all closing costs. Doing the 80/20 over the 20% down was a lifesaver. I really didn't want to throw down $49k to avoid PMI... since I have nowhere near 49 thousand dollars, it wasn't an option anyway. Doing the 80/20 vs one loan, I'm only paying about $20-30 more a month in interest.... definitely worth not spending the 50 grand cash, plus closing costs (which were like 12 thousand dollars when everything was said and done).

I ended up in my house with no money out of my pocket except for my personal home inspection.

Investment property lending is my bread and butter!

Most banks/credit unions will do a commercial mortgage on a non-owner occupied 1-4 family - it depends on their investor. Some will allow a consumer loan (which will be the statndard stuff you already know ) Once you have 5 units, it is def commercial. We try to do anything non-owner occupied as commercial.

A commercial mortgage will be for up tp 80% (sometimes up to 90%, sometimes only 75%) of the appraised value. They will look for a debt service coverage of 120% - computed as net operating income divided by debt service. Net operaitng income is gross rent, less vacancy factor and expenses (excluding depreciation and interest). Debt service is principal and interest for the year.

You should ask the seller to "share" his fed return schedules E - where he reported income and expense. You want to research rental rates in the area, and compare them to what he is charging. Ask for lease copies (you will want to execute new leases after closing).

You will pay a bit more in closing costs - but you will get the same stuff - appraisal, title insurance, hazard insurance, survey... You will pay an origination fee of about 1%.

You might want to form an LLC - speak to your attorney.

Rates will be based on something like the 5 year T bill - which was 4.69 on friday - plus like 3 - 3.5%. They will usually want a varaible rate - adjusting each 3 years. Plus - you will get a balloon - a 5 - 10 year term and a 20 - 25 year amortization.


PS - For YOUR house - If you buy an older home, you may have a well and septic, not town water ans sewer...like mine (over 100 years old). So no water or sewer bill. Also, I pay my trash to a private company - it's $52 every other month for a 65 gallon bucket, weekly pickup.

Everything I've read is that balloon payments are a bad idea...right there with interest-only and 50 year mortgages! ARM are not worth it IMO, better to take a fixed with a slightly higher rate...then you can refinance on your terms (like when rates crash) instead of being forced to accept a new rate when the bank chooses (usually higher!).

A balloon on a residential mortgage is generally bad for a regular person who wants to live in the house for like "forever". The residential ARM can be very very bad in a rising rate environment (where we are now). If there are circumstances that make you pretty sure you;d refi in say a three year priod, any of these are ok. As for getting those 2 notes, the issue would be if you MUST sell it in a few years, you may be upsidedown - you will owe more than it is worth. But, hopefully there will be no reason to sell, and you will live there for a long and healthy time!!

A commercial loan is a different animal all together. These are for investment properties, which will be sold, refinanced, rehabbed, etc. Having a 10 year term is fine - if you still want to have the investment after this time, you will either refinance or sell. Generally having a 5 or 10 year term on investment real property is standard. after the term, you can refinance it with the same lender, as long as it still "works".

The shorter term gives the lender an "out" if the property falls vacant or to bad disrepair. Over the years, I have seen some doozies in the foreclosure process...

well, i'm going to look at 5 houses Saturday morning. I'm not really sure why, because I'm not ready to buy, but my Reale Estate agent says I need to start looking, because it might take a while to find the one I really want.

Waiting will save you money. Prices are coming down in all of the markets.....

It's not a bad idea to LOOK, because it will give you an idea of how much house is for how much money.

Don't let them pressure you if you really aren't ready.

I am of the mind that if I look I will buy. True of cars, bikes, gloves, lipstick, whatever! So, I wouldn't bother to look till I was ready to buy. I always say I accidently bought my jeep on the way home from work. I only stopped to look, and I ended up buying. When I only went to look at the option of trading in my 600 for my 750, I was consumed, and did it. But that's just me. I guess if I am actually moved to look, I'm really going to do it. I just "buy" under the guise of "looking".

(do I sleep under the guise of napping, eat under the guise of tasting...am I living a lie?)

Thanks for the information in this thread, guys. While I'm not quite looking yet, I am always looking for more information.