First rental! Good deal, not great

4 Replies

just put in an offer on our first property! Yay! But... I’ve been absorbing BP content for about a year or so and I don’t know why the whole cash out refi didn’t make sense to me. But here we are with basically a turnkey renal. House is worth about 75k, counter offer came in at 75 after we offered 70k (original price 79.9) rent is 700 a month and we don’t want to go over 70k for the 1% rule. We could do minor things to bring rent to $ 775-800. Our goal is to scale fairly quickly and sensibly and are willing to buy outside of our market if we need to. So seeking advice on whether we should A) except counter offer and learn what we can from our first rental as we save for our next downpayment with our full time jobs. Or B) hold off, decline offer, look for a fixer upper and do the BRRR method properly to have our downpayment pay for many properties to come. Thanks for your input

@Krystal Watson - I agree with Mark that $5k isn't going to make or break the deal. My question to you is this: do the numbers work for you to buy a place for $75k that brings in $700/mo? If so, go for it. If not, move on.  
Personally, it's unlikely those numbers would work for me. Once you add taxes, insurance and maintenance, how much of the $700 is left? I probably wouldn't pay more than $50k or $55k, but that's me. We all have our models and what's important is that you stay true to the numbers that work for you. Good luck! 

Pass! With closing costs you will have negative equity and the cash flow is nothing to write home about.  Your time is too valuable to spend on marginal deals.

Set a $1,000 budget and mail to every absentee owner in Ennis, Montana.  You will find a better deal.