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Brian Whitney
  • Pittsburgh, PA
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What am I missing here

Brian Whitney
  • Pittsburgh, PA
Posted Feb 21 2018, 19:49

Hi All, 

Just looking for some thoughts/opinions as I continue to look for my first property. I may be purchasing a property shortly, but I also have leads on 2 duplexes and a SFH.

As I continue to analyze properties, it seems that the expenses are eating up a large portion of the cashflow, especially when utilities aren't separated. 

Duplex 1 would cash flow about $105 per month at a 10-12% cash on cash because the utilities are not separated. The seller is asking 50k but I believe I can get the property moderately cheaper; however, whether I pay 40k or even 30k, its not going to change the mortgage payment much, thus not really changing the cash flow. In an instance like this, how do you decide if the property is a good deal? Im looking down the road at how to scale my portfolio and cash flowing $100 per month doesn't seem like the way to get there. But how would I justify passing up the equity if I can get a good deal on the property? 

Duplex 2 is a similar situation. The seller is asking 40k but it needs some rehab. Lets say I can purchase the property for 25k. Even if the property is rehabbed and there is equity in the property, Im back to the same lack of cash flow, but a good purchase price with equity. 

Finally, I can buy a SFH all in closing/repairs for 13k. The expenses are $425 and it rents for $625, renter pays all utilities except garbage and sewage. This property would give me cash on cash of 18%. But its not in a good area, and the seller has horror stories collecting rent. Even though the property is very cheap, I dont foresee much appreciation and would bet on a high hassle factor.

I guess it seems that if the utilities are not separated, its very hard to cash flow because you are not going to find the properties much cheaper. It doesnt seem like the mortgage cost is what is eating the cash flow. 

Any opinions on the aforementioned jumble of thoughts ?

Thanks in advance, 

Brian  

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