Signed Contracts on 2 Rentals with Local Investor

2 Replies

I wanted to share this deal with the group:

I just signed a contract on 2 rental properties for sale with an investor who was living around the corner. I showed him the two homes and he immediately signed contracts and put up the earnest money. He's closing in 2 weeks. Here was the deal:

Investment: $99,900
Appraised Value - $215k
Equity - $115k
Gross Rent: $20,700/Yr - $1,725/mo
Taxes: $6,242/Yr - $520/mo
Insurance: $1,200/Yr - $100/mo
Prop Mgmt: $1,560/Yr - $130/mo
Total Expenses: $9,002/Yr - $750/mo
Cash Flow: $11,698/Yr - $974/mo

Just curious how you're arriving at that Appraised value... are you really implying that he bought the home for less than half of FMV?

Looking at rents, that's .8% of FMV monthly. I thought the 2% rule was pretty easy to hit in that part of Ohio.

Don't get me wrong, solid deal in my neck of the woods in Utah... I just thought Cleveland offered better.

Yes its FMV, maybe off by a couple thousand. Also I make my deals very attractive for investors so they are no brainers. Tenants have 2 year leases, houses are exceptionally well cared for and in suburbs and I'm still making tremendous profit.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here