1% Interest only 5 year arm

[cecsix]

Anybody heard about this loan?  my broker is telling me he can finance a purchase of up to 4 properties/units in this program at 100%.  This would be pretty ideal for some properties I'm looking at right now, because my intention would be to hold them for 2-3 years and resell anyway.  

sounds too good to be true, but i've done business with this guy before, and he seems to be on the up and up.

[reoconsultants]

The only thing I do not like about arm's is where are rates going to be in 5 years! if the rate jumps back to where it was in the 80's you would be better off getting a 30year fixed at 6.9%...

[cecsix]

that's what i'm afraid of, but for a beginner, the idea of $800-$900 PCF on four properties is awfully tantalizing.  

[reoconsultants]

How long are you wanting to hold? If you only want to hold for 5 years go for it.. Just keep it in your mind if rates are high in 5 years you are going to want to sell!

[6hundy]

understand how this loan works first before you make your decision.  you do have a 1% payment but its a little more complicated then that.  ask you buddy what the margin and  the index of the loan is.  your index could be the LIBOR, MTA, or COFI, all of which have different values on any given day.  Your margin will depend on a couple of different factor but it mostly has to do with how much $$$ your broker want to make on the loan.  add the 2 values together and this is your fully indexed rate.  For example say the MTA is @ 2.75 today and your margin is 3...your fully indexed rate is 5.75.  keep in mind that you are paying 5.75% in interest no matter what...whatever the difference between the fully indexed rate and your payment rate is tacked on to the rear of your loan as deffered interest (i.e. you balance goes up).  your payment may only be a fraction of a conventional mortgage but that money you are "saving" is going somewhere...you will pay it back when you sell the home.  

this loan is not the bargain that brokers make it out to be.  and to top it off the loan is also completely adjustable.  the rate changes every month.  your minumum payment is fixed but your fully indexed rate is not.  as rates go up, so is the amout of interest you are deffering.

[ginasands]

This loan is for the very savy investor.  Don't get the loan and spend all of the difference between what you should be paying and what you are actually paying, you have to put at least 1/2 of what you are saving (i.e, If you are saving 900 per month, put $450.00)  into an interest bearing account.  

Do this religiously for the life of the loan (the five years).  At the end of the five years  You can go back to the beginning and start it again.  do your math, how much money have you saved, you can pay your loan down with the money you saved and still be way ahead of the game.  

When I saw this program on what the agent called a "Miracle Spread sheet" It certainly makes sense, but you must do it with your head and be smart and save some of that money... This is the only way you will come out ahead of the game.

[cecsix]

Good points everybody.  Instead of saving the $450 as you suggest, my intentions were to use that cash to close more deals, either flips, lease options, or rentals.  

Would you suggest not doing so?

[sunint@sourceonepr]

Cecsix,

I would be interested in talking to your loan guy too ?


Sunny

[cecsix]

Cecsix,

I would be interested in talking to your loan guy too ?


Sunny

Sunny,

I believe you said you live in Powell?  I am in the Columbus area as well, as is the mortgage guy I'm working with.  I will IM his information to you, and if you are looking to work with somebody to get you started, I definitely recommend this guy.  He has given me a ton of guidance, and doesn't charge outrageous fees.  Check your IM box in a few minutes.  

Chad

[sunint@sourceonepr]

Thanks a lot for the help Chad. I got his number and will talk to him today and off course will mention your name as well.

I would like to join Columbus REIA, are you a member of it ? If yes, do you recomend it? How can we benefit from it?


Sunny

[cecsix]

Thanks a lot for the help Chad. I got his number and will talk to him today and off course will mention your name as well.

I would like to join Columbus REIA, are you a member of it ? If yes, do you recomend it? How can we benefit from it?


Sunny

Actually, I just joined myself.  I've gone to a few meetings as a guest, and the greatest benefit I see is really just networking with other investors who have experience and are willing to help you.  For the time and money invested, I can't imagine that it wouldn't at least be "worth it".  

[sunint@sourceonepr]

Hey ,

Networking and having someone to toss your idea by is GREAT. I am all up for it.

How do I become a member and when do they meet.

I also was looking at this Columbus Cashflow Club and sent them an email to find out what do they do?

They meet this Sunday. Do you know anything about them?

Columbus Cashflow Club  
Contact Person: Scott or Jackie Masek
Meeting Location: Call for Directions
Meeting Time: 2nd and 4th Sunday, 4 p.m.
City, State Zip: Dublin, Ohio  43017
Phone Number: 614-764-8085
Email: scottjackiemasek@prodigy.net

[cecsix]

Hey ,

Networking and having someone to toss your idea by is GREAT. I am all up for it.

How do I become a member and when do they meet.

I also was looking at this Columbus Cashflow Club and sent them an email to find out what do they do?

They meet this Sunday. Do you know anything about them?

Columbus Cashflow Club  
Contact Person: Scott or Jackie Masek
Meeting Location: Call for Directions
Meeting Time: 2nd and 4th Sunday, 4 p.m.
City, State Zip: Dublin, Ohio  43017
Phone Number: 614-764-8085
Email: scottjackiemasek@prodigy.net

Thanks Sunny, no I don't know anything about them.  Do we just email Scott and Jackie to sign up?  

For the Columbus REIA, go to :

www.reiacolumbus.org

They meet the first Tuesday of each month I believe.  

[sunint@sourceonepr]

I emailed Scott yesterday and haven't heard back yet. I am going to call him today and If I still do not hear back then I guess, I just show up then ?

Thanks for the link of REIA of Columbus.

BTW, I also posted a note about something that I am working on. Title I believe was, "New Proposal, Need Opinions" something. Did you read that?

Would love to hear what you think about it ?

Sunny