This platform has been very helpful in increasing my insight into real estate and really appreciate everyone's input.
I am almost end of the process of buying a property in Houston.
Purchase price :154k, 2007 built, 2160 sq feet, decent school ratings.
May rent for $1395
Cash flow after all expenses PITI, management 8%, vacancies 5%, repairs 5%, leasing 1/2 month rent per year- will be around $60.
Was it a good buy with so low cash flow. Any advice for future buying and is it still good to buy anything in Texas!
All inputs highly appreciated
@Souji Kumar I invest 2 hours outside of Houston and I would say that cashflow is a little low for me. A 2.3% return on your downpayment is not too good. I also think that your estimated 5% vacancies and 5% repairs are a little low. I estimate 10% vacancy and 12% repairs/capex. Personally from what info you have given me, I would not buy this property. I could purchase 2 properties for 154k and both of them would easily rent for $1,250 a month. I would double check your numbers and make sure you are not buying a negatively cash flowing property because with the info you gave me it looks like it will be close.
@Ryan Detig , where do you invest near Houston?
I thinks it's late now as I already paid for inspections appraisal and initial escrow deposit. What can be done from now
@Souji Kumar I invest in South east Texas. Beaumont, Nederland, Groves, Port Neches area. Have you gone past your option period? Obviously everyone has different financial situations and maybe a negatively cashflowing investment (is it an investment at that point?) aligns with your current financial plans but I would be very cautious about this. I think you should get some advice from someone that knows the area of the property, run your numbers with the local person input, and be prepared a make a tough decision regarding moving forward or backing out and potentially loosing your deposit.
This cashflow looks slim. I would see if there is a way out of the contract without losing your deposit.
@Craig Bellot thank you for your input
If you keep all expenses as you estimated them, but raise the vacancy to a full month a year, you would break even or effectively have 0 cash flow with 30K+ out of pocket. I would suggest looking for another deal.
Losing your earnest money deposit is better than losing your shirt every month on an investment.
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