First House (Almost) debating if it's worth it.
Hello BP!
I've been looking at my first house (well, 1 of many) and decided to move in on it after really digging around.
Trulia rates other houses in the area a little high ($120K+), I was able to bargain for $100,500.
Low crime rate, near zero, located south of Chicago, IL. Rents in the area are $1500+
(Queue the laughing of buying in Illinois)
The house already has a tenant, but they will be moving out.
I'm using a PM, as I am investing OOS and actually living overseas.
My PM performed the home inspection, and like most, I freaked out at the amount of issues that are shown on the spreadsheet, with pictures and such as well as pricing to fix/rehab. My PM said that if the property does not cash flow positive, they won't even bother with going through with the deal and would advise me to dump it (after already sinking in $1500 for the LPOA (Power of Attorney) and the home inspection.
Anyways, the repair costs will be about $12,600 all said and done. They are recommending I replace a 22 year old HVAC system (~$5000). The house is still in very good shape, the inspector said according to their findings that it's just needs some proper maintenance and fixing up. (All this does scare me of course as some of this I could probably do myself, but than why would I need a PM. And I believe this is the age old question of to Do or Not Do (yourself)), but I can't as I'm over the ocean.
I expect to rent it for $1600, with close to $400 in cash flow. According to the loan, insurance and tax, PM fee, $1600 would cover it all and leave me with $375-$400
I expect to put down $20,000 (20%) and have a reserve of about $10K for vacancy and maintenance reserves.
So all in all... $42,600 initial... for a $100,200K home.
Anyone who does out of state investing can chime in? Is that normal? About what you would find and expect? Thoughts? Advice? Is my Math wrong?
I want to pull the plug on it and go through with it, but something in the back of my mind is saying "ask BP".
I'm originally from Boston, but my PM doesn't operate out of Boston. Plus, Boston area is like buying several Park Place and Boardwalks. I'm looking to start with the Connecticut Avenues and Charles Places on the monopoly board.