Taking Care of Business

by James & Miel on March 30, 2010 · 6 comments

Hello Folks,

If you’ve been following this blog you’ll know that we’ve been working on closing on another property in the district.
Well last night we sold our stock to raise the down payment funds. The closing date is April 13th, but we wanted to have the funds in cash so there won’t be worries about how the market does between now and the 13th.
We signed the loan paperwork last night as well. We are paying 5.75% with 25% down on an investment property worth approximately $185,000. So, the balance of our loan will be about $139,000 dollars and we’re looking at payments of just under $950 dollars a month.
The loan is with Branch Banking and Trust, who I am less than enthusiastic about working with. The company has a habit of helping themselves to their customers bank balances via fee harvesting. BB&T also tends to charge for things customers should get for free – such as conversations with customer service and starter checks.
Honestly, this will be our third property in the District and maybe the 5th piece of real estate that my wife and I have owned together. For what its worth, the next time we buy a place I think I’m going to try to go all cash. Having been through a couple of different markets and having worked with various lenders in different states, it seems like the real estate borrowing process is geared more towards lining the pockets of the banks and less towards consumer choice and empowerment. Basically after 7 years of being in real estate I’ve concluded it makes more sense to save the money, rather than hassle with banks and their fees.
Best,
James


{ 6 comments… read them below or add one }

1 Anonymous March 30, 2010 at 10:11 am

I had a modest car loan with BB&T. After a few payments, I decided to pay off a large sum equal to about 4 months of payments. I sent a check in with clear instructions to apply additional to principle. They processed my check towards future principle AND interest. The automated phone system told me the next amount due was several months in the future. After a decent amount of time with a CSR, they were able to fix it.

2 Ken Mott March 30, 2010 at 1:20 pm

The problem with all cash is you arent getting any leverage in the deal.

3 2million March 30, 2010 at 2:30 pm

Im impressed you got a 30yr fixed rate mortgage on an investment property for 5.75% – pay any points?

4 Dual Income No Kids March 30, 2010 at 3:27 pm

Thanks 2million – nope, no points.

5 Financial Samurai March 31, 2010 at 1:56 am

Great stuff, congrats guys! What do you think you'll be able to rent it out at?

5.75% sounds about right for a rental prop.

6 Jason March 31, 2010 at 10:55 am

"it seems like the real estate borrowing process is geared more towards lining the pockets of the banks and less towards consumer choice and empowerment. Basically after 7 years of being in real estate I've concluded it makes more sense to save the money, rather than hassle with banks and their fees."

Congrats on seeing the light finally, I am surprised it took that many times.

We figured it out after the first home loan. I don't think there is one person in the process I would want to do business with again. I would love to purchase some rental property but am unwilling to do so until I can pay cash. I understand it may not be the "best" return on my cash vs stocks or other more liquid investments but if I was going to purchase additional real estate I would have to look at cash flow vs capital appreciation. Good luck…

On a side note I like the blog I check every morning for new posts and as dinks we enjoy seeing how others are doing with the same life choices we made. Keep up the good work.

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