So as I stated in earlier posts Im looking to secure my retirement by purchasing enough rental properties to allow me to live of the cash flow once they are paid off (any positive cash flow in the meantime would be re-invested)
So browsing this morning I came across a property one block over from my house for sale. It got me thinking. So without knowing all the details but basing the ones I didn't know on my house (exact same house) I came up with these figures running it through the BP calculator.
This is all assuming I could get the house for a good price of around 185,000 (asking 199,000 and I paid 190 for mine about 6 years ago in better condition so may be able to get it for less) a little rehabbing (10k worth) would probably be worth around (210-220 conservatively)
If I went the traditional route
Purchase Closing Costs:$10,000.00
Total Project Cost:$205,000.00
After Repair Value:$215,000.00
Loan Fees:Amortized Over:15 years
Loan Interest Rate:4.000%
Total Cash Needed
I know with renting my basement apartment for $1300 and what I could rent the rest of the house for I could probably get about $3,000 in rent from the house.
The calculator put the cash flow around $800 per month (honestly that would be great but Id consider it a bonus because my goal is in the long run when its paid off to collect the rents for retirement and would probably use any cashflow in the meantime to re-invest in something else)
so here is what I have in terms of funds
roughly $10,000 cash
50-70k in equity in my home (based on what it would appraise for 210-240 owe 160)
my thoughts were pull the equity out of my home for the down payment and maybe enough for any repairs. Then use my cash for closing costs and just bank any cashflow to build those saving up again. This is all based on if I could even get a mortgage for the house.
Im sure I left out details but would you seasoned investors buy this as a buy and hold and if you would how would you go about it if you were me?
also I should add that to me having it be right around the corner from my current house and knowing the area are big plusses for me. And this is the exact same house as mine so I know it inside and out. Also over the years since Ive lived here this particular house I'm looking at has been listed for sale a few times but never sold so I'm assuming the current owners are having some type of issue paying so I don't know if that helps me any.
Originally posted by @Chris Seveney :
Does that include vacancy, repairs, capex, taxes, insurance, water/sewer etc. $800 cash flow on a property with roughly a 1.5% rent to purchase seems high. Did you use the BP calculator
I did use the calculator, I did not add any vacancy or repairs or capex, the rest I did include though. Like I said the cash flow now while the house is being paid off would be great but its not my main goal, I don't know if my thinking that way is correct though. being if Im tying up all that money in the house if I should expect more cashflow.
knowing what I know from my house and what I rent the apartment for and what I could get for the rest of the house and what my expenses are I don't think $800 a month is out of the question though.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing