I am looking into investing 15-20k in a small property. no more than 115k. I was looking outside Atlanta, Hobe Sound Florida, Seattle, Miami, etc. Any advice??????
2 bd 1 or 2 bath
$20k down (20%)
$782.00 per month
$250..00 HOA fees
$1032.00 Payment for home in total
Charge $1250.00 per month rent
$218.00 in pocket
I am getting some cash flow properties like that in the suburban of Atlanta. I have a contact there that sell me the deals for a 7k flat fee. Let me know if you are interested
You are going to lose money. Your thinking your gonna pocket the difference without factoring in vacancy or repairs or anything else. You need to learn how to run ALL the numbers.
@Samantha klein What would you suggest? Larger down payment???
Find a better deal. A 115k condo that only rents for 1250 and has an HOA is not a good idea for several reasons. First, does the HOA allow rentals and if so, its likely they will be a pain to deal with if your tenants happen to break any rules. Second, I would do a multi-family instead in a good area. You can either live in it for a period of time and get favorable loan terms or just rent it out completely but that is probably your best bet. Do not forget to factor in vacancy, repairs/maintenance, Property management even if you are going to self manage, Capex. I use 8% for vacancy, 10% each for Capex, PM and repairs/maintenance.
@Samantha Klein Multi Family meaning a 2 family or like a 3-4 family? The only thing for me now is the initial investment and down payment. I only have so much to invest upfront. So scratch the small condo. Thank you for your advice.
Yes a 2-4 family. You can use an FHA loan with only 3.5% down so you could buy a 100k property and only put down $3,500. In your situation as a first time investor just getting started, I would absolutely find a 4 plex to house hack. You should be able to live for free and maybe make a little extra too.
@Samantha Klein Do you know where I can find 2-4 families for 100k? I'm up for suggestions. As a first time investor what would you do?
I agree with @Samantha Klein .
Buy the book "what every investor needs to know about cash flow" and learn how to run the figures. Here is a quick rundown of NOI
PGI (potential gross income
-VCL (vacancy and collection losses)
=EGI (effective gross income)
-OE (operating expenses--taxes, insurance, maintenance, fees like HOA or condo, etc and dont leave anything out)
=NOI (net operating income)
you can divide NOI into price paid to get cape rate
Once you have NOI then you can factor in CapEx, financing, etc to find the actual picture)
Living for free on Staten Island with a $100K mortgage. Wow.
I thought this was all out of state?
No mention of a property manager. Or at least no expenses for a property manager. Most places they don't work for free.
I agree that if PITIH is $1032 and rent is $1250 then you will be cash flow neutral at best over the next 5 years. And for sure, after depreciation, you will have tax losses annually that may exceed your limits. Crappy place to be, IMO.
Another consideration.... low end condos in the Raleigh area haven't appreciated like SFR and apartments. They (low end condos, and many townhouses) haven't even kept up with inflation over the last 20+ years. I know. We bought a bunch about 10 years ago and held for a while. Sold all off in 2016 and 2017. Gotta buy at $30K or so and rent for $700 to make money. Even then it isn't a slam dunk.
Good luck with your venture
@William DeLuca : Have you tried using the BP rental calculator to analyze the property? If not, I think it'll give you a better idea of what to consider when looking at the cash flow. For a SFR, I think its wise to have at least 200$ cash flow to make it worth your time. Redfin is a good place to look for properties if you haven't already.
I dont think you are fully understanding William, what Samantha is saying. You can use FHA and put down as little as 3.5% for multifamily, so rather than just going upto 100k property for multifamily, now you are able to go upto 200k to 300k with what you have for down payment. Plus you will be cash flowing alot better than the condo deal.
use the rental property analysis tool on this site. you get 5 free but go pro and run all the analyses you want
How about going mid-west, Indianapolis, Cincinnati, Columbus (& cleveland-west part, parma, oh ) etc, & St Louis Kansas City. If you can cherry pick the location & property they do cash flow pretty well. If you are open to travel to these locations and do some ground work before renting, you may be able to get started way under 115K.
Or you could possibly get a good rental property in and around Dallas. When you are thinking as far as Seattle while living on the east coast, I could recommend DFW region. At the end of the day, location comes after running the numbers, but numbers depend on location. So its kind of related, but location first, followed by numbers will help you start to focus.
Feel free to inbox me do discuss.