I will be submitting an offer to purchase my 7th property soon.
I'd appreciate it if some of you could give me your opinions as to if it's bad, good or a great deal.
It's a 2 bedroom 1 bath, 1100 square feet, 1 story, single family house. In addition, it's a Freddie Mac foreclosure. Built year is 1945 (approx), vinyl exterior.
Purchase price $23,250
Closing Cost $2000
Financing is 70% LTV @ 5.25% fixed for 5 years, amortized over 20 years (portfolio lender)
Repair Required $5000
Monthly rent $550 a month
Property Taxes $910
Property Management 10%
Annual Capital Reserve $1000
Annual Repair & Maintenance $800
All utilities will be paid by tenant.n
Have you checked the wiring? 1945 + Copper wire = ?
23,250 + 2k closing + 5k rehab = 30,250 invested
yearly rents = 6600
minus 35% (10% PM, 10% Capital Reserve, 10% Vacancy, 5% repair) = 4290 operating income
minus operating expenses
3030/30250 = 10%
Seems fine as long as you don't run into any surprises in regards to repairs and rental rates
This could be a better than average deal in an appreciating area and worse than average in a depreciating area. The cash flow alone doesn't justify the purchase in this house without knowing the demographics
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