Buying and renting out a Single Family home

3 Replies

Got another question for you guys at bigger pockets:)

Also since I am a beginner, I went on the weekend to chapters and looked at various real estate investing books, if anyone has any good suggestions that could really help me out, please refer me to books, I love reading and learning. With that in mind I have a question.

So I have found a nice single family home,  that I am considering buying. It is currently listed at 227,000, but I know for a fact I can low ball and get them down to around 210,000 or so.

It is in a very good location, close to sports coliseum and LRT station. Has 3 bedrooms and 2 bathroom, total sq footage is 1300. Heres the good thing, built in 1994. So its realitvely new.

The monthly mortgage is 800 dollars, which isn't bad in my opinion.

I plan on renting the whole house out for 1,600 plus they pay utilities, which I think is a very very good price. I looked at other houses in the area being rented out and they range from 1,500 to 1,800 dollars.

So I would only have to pay the mortgage each money as well as property tax and house insurance. House insurance is only 100 a month and property tax 150 a month.

So total expenses is 1050 dollars. I get 1,600 dollars. So I should make around 550 dollars a month cash flow. Even if I make 400 dollars a month extra I would be happy:). Just looking to get my first house no matter what I have to do.

Also I do work as a 4th year electrician so even if something goes wrong like vacancy I make 4,000 dollars every 2 weeks, so a lousy 800 a month in mortgage wont kill me. What is your opinion on this? Do my expenses add up, is it a worth while deal, or should I get a duplex instead or a fourplex?

This deal seems better for me just because I already have 40,000 dollars which is the downpayment needed, in the bank just sitting there right now

You are cash flowing so can't complain about that. It depends what your goal ROI is on your money. Only you can answer that question.

In terms of cash flow, don't forget the 50% rule! 50% of your cash flow will go to non debt related exp: repairs, vacancy, and capital expenditure, etc. It won't happen every month but over time you can expect this to be a good estimate.

Also leave room for property management. Even though you're not using it now, in the future you might want to!

As for books. Listen to the bigger pockets podcast. On the last part they ask everyone what their favorite book is.

Good luck!

Originally posted by @Luka Milicevic :

You are cash flowing so can't complain about that. It depends what your goal ROI is on your money. Only you can answer that question.

In terms of cash flow, don't forget the 50% rule! 50% of your cash flow will go to non debt related exp: repairs, vacancy, and capital expenditure, etc. It won't happen every month but over time you can expect this to be a good estimate.

Also leave room for property management. Even though you're not using it now, in the future you might want to!

As for books. Listen to the bigger pockets podcast. On the last part they ask everyone what their favorite book is.

Good luck!

 If i did get a property manager to

manage it, would i still have positive cash flow? what do u think? i would like to have all property managers so i can keep working fulltime

Estimate between 8-12% of your total rent going to property mgt. 

So if your place rents for $1000/month property mgt would be between $80-$120/month.

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