I just purchased a 1br house for $53K. It was a Fannie Mae repo (in my town). Fannie Mae painted, carpeted, repaired the roof, and purchased new stove. I purchased a new fridge and wall AC, mini blinds, plumbing fixtures etc ($800 worth). I still need to scrape and paint the outside.
It just rented for $525 w/$400 damage deposit. My payment is $414 including taxes and insurance. I pay for garbage [email protected]$15/mo.
This is our first and I'm wondering if this deal is too tight, just not enough cash flow. Considering 10% vacancy rate, ??% maint, repairs, and ???.
Also, I plan on doing the property management/repairs, so do I figure a percentage for that? The area is stable but not growing. Other houses on the street are $50K to $70K.
Does this look good and I just have a small case of buyers remorse or have I screwed up?
P.S. Talking about this purchase was cool, but now that I've done it. . . I have moved out of my comfortable rut.
Thanks for any comments/suggestions/opinions
In my opinion there are two things wrong with this equation:
1. Deposit is too low - you want the deposit to be as much or more than one month's rent. This is to be used for damages which (in my contracts) includes lost rent if my tenant breaks his or her contract.
2. Cash flow is a little tight. Your rent is 11% of your purchase price (which is pretty average). It's better than the 6ish % interest rate that you likely have so that's good, but all the same I try to get 15% or higher rent to price ratio.
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