BiggerPockets

I have a builder offering me a rehab for $119,900. He will take a 2nd for $24,000 that will serve as my down payment. After a couple of on time payments, he will then forgive the 2nd mortgage leaving me with a purchase price of $95,900 which will also be my loan purchase amount. The Zestimate is $154,000 but we are assuming an appraisal of $130,000. The neighbor's house sold in 2008 for $142,000 with same characteristics-bedrooms,baths etc. This will be rehabbed so it could be worth more. Next door is an empty lot that same builder wants to put up a bigger house. This area is an inner city but has been experiencing a lot of investments by the city. They have torn down neighborhoods and built real nice new ones. Its is also a couple blocks away from a minority college. A monorail is being built nearby. He will even mark it up a few thousand to pay closing cost so my out of pocket will be just a few hundred bucks if any. His wife is a Real estate agent that will property manage it if I desire. I plan on renting. Its a 3bed-1bath that supposedly will rent for atleast $1100-$1200. Positve cash flow of $200-$300 based upon that rental amount. Good deal for first time investor with no money? I only have a couple thousand to my name so this seems to be the only way I can get in a property.

Where are you getting operating expenses of $600? It's newly rehabbed so I don't expect a lot of operational expense. Looks like I'm going to check your book out either way. Keep up the good work.

I'm the rookie here lol, you tell me!

You beat me to it, Jon!

Most rookies don't take all OEs into consideration, Darin. It isn't a big deal. It is important to factor all of that in to properly analyze whether a deal is going to cash flow or not.

You're assuming operating expenses will be only 35% of the rent. That's too low. Use Mike's analysis.

Rent to own is a glorified rental. You might get a tad more than market rent.

Thanks for the reply, Ironically I was reading your blog the same time you were replying to mine. I have been studying for a while and these forums are just a small part of it but the most helpful. My problem is not having the cash to buy a property. 3yrs of court with my ex and the blood thirsty lawyers have whiped me clean. Hard money is too expensive for my market. So to find someone willing to get me in the business with no money down is a blessing and I'd like to add quite hard to find. Upon looking at this deal, I factored in a short term rental 1-2 yrs. It comes rehabbed and with instant equity. All for $95,000. My market isn't suffering like other markets around the country. So basically, do I roll the dice and hope I get a good tenant for a yr or two and sell for a possible $30-50,000 equity grab. I feel like I'm at my wits and this is the best deal I can find. It was a referal from a realtor that runs my real estate meetup group. I do throw bids out with my hard money but propertys around here go for .70c on the dollar & I need .40-.50c. I'm not trying to be a long term landlord right now, just short term to get an equity grab so I can have a little breathing room. Thanks again for all the replies. Also, doing this with a 6% loan instead of 7% have any positive outcome. I have a mortgage connection that might slide one by at 5%-6%.

lol, man eat man world out there, everyone tryin to survive. My ex hasn't worked in 9yrs but managed to buy two properties by wallets in the mortgage business who make things slide by. I figured why not try myself.

Hey, I like honesty. The mortgager is unknown to the other parties at this time. It was just a thought to the equation just in case it was needed to make this cash flow positive. I'm taking a further review on Tue. with this builder. Over 10 people in my investment group have bought from this builder and he came highly recomended from an investor friendly perspective. I'm the only rookie so I think they are trying to help me considering my situation. I might of been hosed by my ex but I will definitely use due dilligence in this matter! p.s. It's not a new property, just a rehab. He does both.