My first purchase
Hi everyone my name is Frances Burt. I am looking to begin my investing career. I have a couple of opportunities and I wanted to see what the community thinks about my idea. We have been offered to purchase a rehabbed home actually next door to us so we know the work put into it. He's asking 20000. Not sure of appraised value, but in this neighborhood it's usually somewhere between 35 and 40. Also we have an older friend who has owned a home next to her that she wants to get rid of for 5000. She's a widow and no longer wants the resposibility. I'm not sure what condition the house is in but updated appraisals in that area are probably somewhere around thirty. We are considering refinancing our home to a fixed thirty yr. to reduce the monthly note. We will also be getting about 500 dollars a month extra income. So whatever the mortgage is, should we not get renters right away we'll be able to cover expenses. Our thought is to purchase the 5000 outright rehab it get an equity loan to purchase the other and that way we'll have rental properties that will more than cover mortgage and expenses. Between the two we can probably get about 1000 dollars in rent. Interested in any thoughts.
Sounds like a good deal. But I'm no fan of owning a rental property next to where I live. Unless you have a property management company handle that stuff, I wouldn't want my tenant to know that I live next door. With any property, as long as the numbers make sense and the location is good for renters, then you should be okay.
It also sounds like these are really old properties, so be aware of expenses. Things may seem good at first. But if you are spending $300/month to maintain the property, there goes all your cash flow. Good luck.
thanx Aristotle for responding. I though about being next door. My hope is at some point to also move and rent out my primary residence. But we'll see if its worth the investment.
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#5 Rehabbing & House Flipping Contributor
- Property Manager
- Oklahoma City, OK
sounds like it could be a good deal. another twist would be to hold it in an LLC and let the tenant know that the owners (yourselves) have hired you to manage it.
You need to evaluate much more than what you mention in this post. Read some of the other posts about analyzing properties for purchase. Good luck.