The inspection is today (Thursday). I have until Saturday at 5:00 p.m. to get out of the deal.
Single family home in Koloa, HI on the island of Kauai. 3 bed/2 bath/2 car garage, 1850 sq. ft. It has an additional basement rental unit that is 550 sq. ft. (1 bed/1 bath).
It was a foreclosure listed for 550K. We bid 603K and there were 9 offers total. We ended up being the 2nd highest offer. The highest offer fell through and we were next in line.
The house needs about 10K worth of cosmetic repair. After repairs, it should comp out around 700K. The median price for Koloa, HI is 873K. The house sold for 547K in 2003. The person who bought it must have refinanced it because it foreclosed in 2010 with a balance of 882K. I'm guessing it appraised for 900K to 950K in 2006. They tried to sell it in 2007 with a list price of 987K and were unsuccessful.
Annual taxes are only $1481/year and insurance will be around $1600/year. With 20% down and a mortgage rate at 4.5%, our total mortgage payment will be $2700/month. I understand that is a big number. However, the basement unit will rent for $1500/month. We currently pay $1500/month for our rental unit and we are in a less desirable area. We will be left paying $1200/month + utilities.
I have two additional rental properties with equity. If I sold them off, I could probably put 330K down, instead of 120K. That would give me a lower mortgage payment. However, my rental income of about 15K/year, principle payments and tax advantages would be gone.
I am expecting a lot of hate mail because 603K is a big number. However, I think it's a good deal. I will know for sure after the inspection today. Fingers crossed.