The fact that the property isn't producing a reasonable ROI is another reason to pause on this particular property.
You need to research the property and the loan assumption terms. Depending on when the loan was issued, your investment time-frame and the condition of the property, this could be an OK or a bad deal. But it is unlikely that it is a terrific deal. You also should investigate how assuming a loan might affect your ability to get other loans in the future. If you appreciate an answer, please give thumbs up. For the most helpful answer, please say thanks with a best answer click.
In my opinion, wIth interest rates at record lows it doesn't make sense to me to assume a loan with a higher balance; especially knowing that you will be refinancing (maybe if you qualfy later under the new rules) at the soon to be higher rates.
If the property appraises well, buy it and lock the rate at today's historic low rates for the next 30 yrs. Your future returns will be better. (Unless you are looking for higher losses or tax write-offs)
If the property doesn't appraise for the asking price, I'd look for a different property to invest my money. I don't understand why you would want to over pay for a piece of real estate? Of course, I am a loan officer working for a Mortgage Bank, so my perspective is different.
I hope this helps.
You also need to look into the whether or not you think you could assume then refinance into a lower rate. You mentioned that the loan to value is high. Do not take on more debt than the house is worth in the current market! That would be a horrible business decision. Property investments are only good when the rate of return on said investment is higher than what you could make investing your money in another investment vehicle.
Kathleen Turner. ABR, CRS, ePro,Certified Paralegal
The Kathleen Turner Realty Group
Keller Williams Realty