FIrst Investment Property Looking for Feedback

2 Replies

Looking for feedback on My First Real estate Deal.

Currently working to buy a Property in a college town that I am an Alumni from, in Western PA.

Smaller University about 6,000 undergrads. THis will be a student Rental

Purchase Price 113k

Rehab 15K

5 Bedroom, including third story finished Attic (2800 Sq Ft)

Rent $2,600 per semester $5,200 for year. $500 summer lease

-this is around average rent for off campus house with Utilites included

Expenses

taxs- $1,700

insurance- $2050

gas- $1,900

Electric- $1,200

Water/Sewer- $2,000

Yearly maintance- $1,000

total= $9,850

NOI based on Semester Rents Without Summer leases and late fees $26,000

($16,150)

Purchasing Home with Primary Home Equity.  All profits will be dumped into Equity annually until Loan is repaid. 

Any Cap Ex funds needed will be pulled from equity as well.

FeedBack would be great! again this is my first investment property. Exit is to hold house for 10 years and sell to 1031 into larger multi family deal.

Have you plugged it into the bigger pockets calculator?

@Logan Koch

Here are my observations/notes:

  • Insurance at $2,050 - this way too much for a SFR. Shop around, you should be able to get a property insured for less than $800/year
  • Yearly maintenance - this seems low. Assuming there will be several students sharing this property, and the nature of your tenant, I'd assume that there will be much more wear and tear on your property than $83/month. This is especially true, since you can potentially have 3 tenant turnovers a year and will need to do some sort of make-ready repairs at each of those times
  • Missing vacancy - you're assuming that you'll have to problem renting the property out every semester/summer. What if this is not the case?
  • Missing property management - are you going to self-manage this property? If not, you'll need to factor in your PM costs

Hope this helps!

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