First Buy and Hold Deal?
I am working on my first buy and hold purchase. Seller is in pre-foreclosure and has a short sale firm helping him sell the property.
Home was built in 2009. I had a home inspection yesterday and there's basically nothing wrong with it. Just a couple minor repairs. It's in a subdivision with new homes being built across the street priced in the $140's and $150's (with more square footage).
Home is 1585 SF, 3 bed, 2.5 bath, 2 car garage.
Here are the numbers:
Market value with minor cosmetic repair (paint, carpet) = $135,000
Short sale price = $110,000
Market rent = $1,150/mth
Property taxes = $1,400/yr
Insurance = $700/yr
Maintenance/Repair/Capex = $1,500/yr (I'm thinking this is pretty conservative given the condition of the house, but let me know if you guys think otherwise.)
HOA = $480/yr
Vacancy = 10% (This one makes me a little nervous because there are a good number of other SFHs that are rentals in this area. American Homes 4 Rent has been very active in this area. I ran the numbers on rentals on MLS in the immediate area and the average days on market for similar properties was 56.)
Mortgage = $459 (conventional financing with 20% down)
I would do property management myself.
With these numbers, cash flow is >$200/month.
What do you guys think? It is nowhere near the 2% rule, but nothing in my market (Raleigh, NC) will come close to that (at least not in any areas that I'd be interested in).
My other thought is that I would be getting it at enough of a discount that I could possibly do a "paint and carpet" flip. I'd rather buy and hold if the numbers make sense, but the vacancy factor seems like a bit of a wild card, so I'd like to have another exit strategy.
Thanks in advance!