Looking for Newbie Rental Property Input

2 Replies

I'm looking at a 3 bed/3 bath listed at 120k in a booming town for a potential fix and rent.  There's a somewhat smaller 3/1 comp around the corner listed for rent at 1795/mo, so I'm confident I could get a 1800/mo rental rate if not higher.  Used what I thought were pretty conservative estimates and still showed a 300/mo cash flow.  Am I missing something big, or is this the deal it looks to be?

The property is in pretty poor shape, but looks to be all cosmetic, and just finished gutting my house so I am comfortable with the renovation and cost estimates.

I live in the same town, so I am very familiar with the area, and it is really up and coming.  Had my realtor estimate my property value after 1 year there, and he estimated a 10% increase in just one year!  

Having trouble attaching images, so here's what the calculator spat out.  https://imgur.com/a/LDdeciL

Great find, Michael! 

The numbers look great to me, and it looks like you've used some really conservative inputs (eg. 10% vacancy is pretty high, but better to be high than too low).

The biggest mistakes new investors make are not knowing the local area, and not knowing the repairs costs/work invoved. So it seems you have both of these covered - which is great. 

Good luck!

PS. personally, I wouldn't listen to what your realtor says about the value of the house in 1 years time. He may be right (I hope he is!) but he may also be wrong. Put trust in yourself to raise the house value via repairs and forced appreciation, instead of the housing market magically raising 10%. (again, I hope it does increase. but nobody can predict that)

Thanks for the input Joel!  I figure I'm going to make some mistakes, so having conservative estimates will give me the cushion to roll with the punches.  

I was pretty surprised with his estimate as well, but he had pretty good evidence: someone bought the same floorplan in the same development for 9% higher this year.  Add that to a brand new designer kitchen instead of the cheap dated one I bought it with, and 10% is entirely plausible!  That being said, I bought and renovated the property to live in and make myself happy, not as an investment, so those numbers are pretty meaningless anyways.