how should I deal with my Realtor?

Question

hello everybody and thanks for reading my question.
from six months ago I was trying to buy a multifamily property in glendale. property costs around 1000000 $ and I want to pay 100000 as a down payment. property is located in good area and projected income is arount 50000 per year. considering todays option arm loans do you think its a wise investment? my calculations shows that the interest only monthly payment is around 7500$ which shows that I will owe
7500-5000=2500 per month or 12*2500 per year.if I try to sell the property in two years do you think its a wise investment?
what should I ethically do with the realtor? he helped me build up my credit and right now he is pushing me to buy this property saying that we put a lot of time looking for it and...
I still think it is not a wise investment what do you think?

Answer 1

It is not a good investment. Even if you get creative on the loan to get it to cashflow, properties here are not appreciating at the moment. So don't count on building any equity before you need to sell or refinance.

That's great that the Realtor helped you, but you need to look out for #1, and don't make any investments out of any sense of obligation towards anyone else.

Answer 2

My quick calculations say that this is a terrible deal. Your interest rate is 10%, way to high for the current market.

Your numbers don't stand up either. Your monthly income will be $4,166, not $5,000. You'll be feeding the alligator over $40,000 per year and that assumes that you have 100% occupancy and no other management, maintenance, repairs or other costs -- a highly unlikely assumption.

The only thing that could salvage this deal will be the expected appreciation over the 2 year holding period. I don't know enough about values in Glendale but in today's market that may be a risky expectation. You'd need at least $140,000 in property value appreciation just to break even after two years when you take selling expenses into account. If the bubble bursts you could be holding a white elephant for many years.

You don't owe the realtor anything but a "thank you" for his time. He's looking a 6 months of work going down the drain with no return for his time so he has an interest in your buying something -- anything. That's HIS risk in the business -- you win some, you lose some.

Don't be pressured.

Answer 3

not a good investment and you need a new realtor since
this one is pushing you to buy something that will lose on a monthly basis.