I will try my best to be short and concise.
Available capital: $40k
Condo(s) I am considering: $30-60k
Estimated CF: 450/month, 5400/year
ROI: ~8-12%, depends on which condo specifically
They're all 1 or 2 bed, 1 baths.
Minimal work needed in units, I can do majority myself, but have two contractor friends .willing to help me out if plumbing/electrical is needed outside the basic stuff.
My money is currently invested and has only averaged about 4% the past 5 years, this past year having been down about .5%.
Would love to hear any thoughts on this scenario, i am in no rush to make my first Deal, but i would certainly rather have my money be better invested where I could actually see some returns (even the lower estimated 8% ROI sounds nice).
Did you include all of your expenses? Property tax, HOA, insurance, repairs, vacancy etc.? Because that seems like a ton of cash flow for a condo in that price range. I'm not sure where you are so I can't speak to what those units might rent for.
Condo's are a tricky and some people love them. Those are really cheap prices for real. Without knowing the details of your market I'd be doing a ton of research to figure what a GOOD deal looks like. I'd add a real estate agent to your core network and leverage those contractor friends. I'd search for distressed condo's via the MLS or off market on your own. Either way I wouldn't expect the level of appreciation a SFH gets and never bank on it.
@Vincent Gurko Not sure what your actual goal is but you could always look into private mortgages at 10% to 12%.
Thank you for pointing that out. Repairs and vacancy are left out. Wasn't sure how to value it because most units only have the appliances like fridge, stove, dishwasher to contend with, alongside the toilet/shower. Also most things i would fix myself at cost, unless it was something more serious plumbing wise.
How do you account for vacancy, is this a percentage of a years worth of rent?
@Vincent Gurko yes vacancy is a percentage, that will vary by area.