I'm on the fence about a property and looking for some feedback.
I ran a quick analysis and story checks out EXCEPT for one pitfall
2 bedroom house - offer $65k cash (foreclosure) with a tank sweep contingency to the bank (local comps are about $140k) with a 30 day closing.
Rehab for $10k (yes it's not that bad - mostly cosmetic) add another $5k for mechanical that haven't surfaced.
Assume $80k initial investment (cash).
Rent for $1300 monthly and the 50% rule is above $650. Hot diggity.
Here lies the problem
Property has a current cesspool.
As a cash buyer I would not have to convert to a septic as most mortgage companies would mandate that. So continuing cesspool it is for the renters.
BRRRR X years down the road or flat out sell and I would have to add a septic system. That is $25k plus deal with neighboring wells that I would pretty much guarantee don't have the 200 foot well liners so now we are talking probably another $12k for the well liners going deeper OR implement a self contained septic that I don't know much about.
Financially I think this makes sense but never had to deal with cesspool and then figuring out how to make the property valuable down the road. I can refinance down the road for the septic system to resell the property I suppose.