Hi everyone, I am a big fan of Real estate Rookie Bigger pockets. I just fully renovated a House in Pennsylvania here some details. Cash Purchase Price: $43k, Renovation & other fees: $66k, Estimated closing: $13k. The projected sale price will be $180k, with a potential profit of $58k. I really don't know if I should sale it or rented out and do a DSCR, Rent will be around $1450. At the moment is not that I need this money to continue investing. What could you recommend? Thank you so much in advance.
Thanks for sharing your project details. It sounds like you've put a lot of work into this renovation.
First, let's break down your options:
### Selling the Property
- You've estimated a potential profit of $58k, which is a significant return on your investment.
- Selling now would give you immediate cash to reinvest or use for other purposes.
### Renting the Property
- With a projected rent of $1450, you need to calculate the Debt Service Coverage Ratio (DSCR) to ensure it's viable.
- DSCR = Net Operating Income / Annual Debt Service
- If the DSCR is above 1, it's generally a good sign.
- You mentioned you don't need the money right now, so holding onto the property could provide long-term rental income and potential appreciation.
Here’s what you should consider:
- **Financing Costs**: If you decide to rent, ensure you factor in all expenses, including mortgage payments, property taxes, insurance, and maintenance.
- **Market Conditions**: Check the local rental market to see if $1450 is competitive and if there's a high demand for rentals in your area.
- **Long-term Goals**: Think about your long-term investment strategy. If you plan to build a rental portfolio, holding onto this property might be a good start.
To help you decide, here are some steps:
- Use the DSCRANALYZER to determine what the cash flow numbers look like.
- Research the local market to understand rental demand and pricing.
- Consider consulting with a real estate agent or property manager to get a better sense of the rental potential.
If you're not in immediate need of the cash, renting could be a good option, especially if the numbers work out. However, if you're looking for a quick return and have other investment opportunities lined up, selling might be the way to go.
Feel free to reach out if you need more specific guidance or have further questions Good luck with your decision.
Thanks for sharing your project details. It sounds like you've put a lot of work into this renovation.
First, let's break down your options:
### Selling the Property
- You've estimated a potential profit of $58k, which is a significant return on your investment.
- Selling now would give you immediate cash to reinvest or use for other purposes.
### Renting the Property
- With a projected rent of $1450, you need to calculate the Debt Service Coverage Ratio (DSCR) to ensure it's viable.
- DSCR = Net Operating Income / Annual Debt Service
- If the DSCR is above 1, it's generally a good sign.
- You mentioned you don't need the money right now, so holding onto the property could provide long-term rental income and potential appreciation.
Here’s what you should consider:
- **Financing Costs**: If you decide to rent, ensure you factor in all expenses, including mortgage payments, property taxes, insurance, and maintenance.
- **Market Conditions**: Check the local rental market to see if $1450 is competitive and if there's a high demand for rentals in your area.
- **Long-term Goals**: Think about your long-term investment strategy. If you plan to build a rental portfolio, holding onto this property might be a good start.
To help you decide, here are some steps:
- Use the DSCRANALYZER to determine what the cash flow numbers look like.
- Research the local market to understand rental demand and pricing.
- Consider consulting with a real estate agent or property manager to get a better sense of the rental potential.
If you're not in immediate need of the cash, renting could be a good option, especially if the numbers work out. However, if you're looking for a quick return and have other investment opportunities lined up, selling might be the way to go.
Feel free to reach out if you need more specific guidance or have further questions Good luck with your decision.
@Ricardo Polanco you might want to investigate the Class of tenants the property is likely to attract.
There's a BIG difference between dealing with Class A tenants vs Class C or D tenants!
Also, if you've rehabbed this to SALE standards, you may only want to rent to Class A tenants that will take good care of the property. Otherwise, a Class C or D tenant will ruin much of the work you've already done.
Thank you very much for the information, this was a great renovation with very good finishes. That was actually my concern, getting the type of tenant that don't destroy the property. Thanks.
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