Found a Deal. Is it good?

7 Replies

Hi Bp- Curious to see what you guys think about this deal. Any insight would be greatly appreciated. Property is out of state so very unlikely I will actually jump on this deal, being it would be my first deal and its out of state. Justing looking for some quick insight. 

Property selling off market for 58,000$ (Paid in Cash) 

House is in great shape, owner told me he put in 37,000$ into a remodel within the last 2 years. Photos appear that the house needs very little if not nothing done to it rehab wise. 

Rent is in section 8 housing and rent comes in on the 1st every month  Rent: 700$

House has passed all government paperwork to be section 8 compliant. 

yearly insurance is 345$

would need to use property management company to manage the property. 

utilities are paid for by the tenant.

Does this add up?

 

This is not enough information to give you any real advice or insight.

What's the ARV? Would you be paying cash or using financing?

Don't forget about your other expenses besides property management too. 

CapEx, Maintenance, Vacancy, etc.

How much are property taxes ? Many states the rate is higher than CA .

What are the comps , recent sale prices of similar properties ?

You said he did a bunch of rehab a couple years ago is that when he bought the property ?

@Brian Garrett thanks for the reply. yes paid in cash. Not sure what the ARV would be, but I plan on holding and letting the property cash flow.

You could definitely find something with $58k in cash that will have better cash flow than this.

I agree with Brian. If you calculate the current ROI it's around 14.4% minus any property upkeep and expenses. This is a solid return, but you could do better.

You do still need to know what the property taxes are, also I would look into the rental market in the area that is not Section 8 and see if the property still makes sense, often Section 8 will offer a premium on market rents.

Current owner has had the Property for around 10 years. Section 8 tenants usually will stay longer periods of time because theres a waitlist. 

Property tax is 910$ yearly. 

House is in good new condition ready to rent. 

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