I'm new: trying to evaluate first (small) deal

6 Replies

So I'm new to this, still haven't jumped on a deal yet.

Anyway, I'm trying to understand the numbers I'm seeing on the calculators.

I've found a pocket deal in Austin, TX that looks real interesting!

  • 2br/1ba condo near downtown (William Cannon & Pleasant Valley), 1975 built
  • $105k asking price (off-market)
  • direct comps sold for $145k recently, w/ Trulia valued @ $135k
  • rentometer says $1195/mo
  • $190/mo HOA fee (I need to find out what this covers)
  • $155/mo taxes
  • not the nicest interior, but its rental ready...could use some modernizing, or leave it as is.

So my question as a novice 1st-timer...I have the cash on hand right now to buy this easily...I'm not sure what I'm reading from the calculator if this makes sense or not.

I assume you buy it outright for $105k, then immediately try to refi out at full appraised $140k-ish. 

It seems like this would cashflow w/ minimal effort and low vacancy at the lower end of the rent ($1195).

  1. How much to mortgage/refi? 80/20%?
  2. how does a novice evaluate this?
  3. Do HOA fees get passed on to the renter?

https://app.dealcheck.io/#!/app/rental/-LZG1ClOCKP...

https://www.calculator.net/rental-property-calcula...

Are you sure that specific condo regime is getting $145K.  There are a few over there that are 2/1's selling for under $100K.   Your Realtor can help check that or I am happy to if you want to PM me.

I would purchase with 80% LTV conventional financing, especially if you're planning little to no rehab. I would also try to find your own rental comps to verify the rent ($1195 may be pushing it for that area). The HOA fee does not get passed on to your tenant. In order to do your analysis, either use the BP rental property calculator, or throw together your own simple spreadsheet.

My quick analysis, based on your numbers, shows a small cashflow at $1195 a month rent. I wouldn't do a deal in that area (not a great area), with an HOA involved, for a 5 - 6% return.

Never trust Zillow and Trulia in Texas as they are almost worthless.  Get accurate comps from a Realtor

-Make double sure this is a lender approved condominium as condo financing can be difficult if it is not. While a local bank may do 20-30% down you need to consider your exit strategy and very few buyers have that kind of down payment

-I am pretty sure I know the complex and owned one there years ago. The HOA has always had financial struggles and a large special assessment could eat up a year or more of cash flow

awesome, thank you for the advice. I don't think I saw an email come thru about this getting scooped up so I guess maybe other investors are passing on it too. 

I'd love to chat with some of you austin people and discuss more, or see if you're interested in partners.

PM me?