Buying a House for 40,000 ?? 600 in Rents??

General Real Estate Investing 75.7K Posts 9.8K Discussions

Hello everyone, i had a friend this mornign who was trying to sell a house he fixed and rehab. he put the house up for sale at 64,900 which was too high in my opinion. he then dropped it do 55,900 and noone inquired. im thinking its worth around 40,000. he says he'll sell it for 40,00 no dollar less then that. Using the 2% rule i should only pay for this house at 30,000 max. This is a all cash deal.

So should i pay for the 40,000 ? is it still worth it or do i offer a smaller number and stick to my guns? and if i should offer a lower number what would u offer max

I'd look at a lot of other homes, too. not just the one a friend is offering. You need to become an expert in your local market before you start buying. Who knows, you might find something good for $30K that rents for $700.

Personally, in my market, for what I buy, I 'd want to be all in for $25K, for a $600 rent. Better yet, all in for $35K for a $900 rent.

Demand that your money and time work very hard for you.

Jon Klaus, SellPropertyFast | [email protected] | 214‑929‑6545

What are the taxes, insurance, maintenance numbers?

Just for the heck of it I plugged in 1000 taxes, 450 insurance, 600 maintenance, 30 year mortgage at 7% and came up with $163.05 cash flow a month.
I use a spreadsheet, and depending on what numbers are different, and if you have other expenses, YMMV.

yea thanks the advice so far.....insurance = 400. taxes - 550 a yr.

Jon Klaus so your saying 25,000 is the max i should be offering? doesnt that seem a little too cheap?

Originally posted by Jon Klaus:
so your saying 25,000 is the max i should be offering? doesnt that seem a little too cheap?


No. I'm not saying what you should offer, knowing nothing about your market, including where it is. I am saying that you will need to do a lot of local research so that you can recognize a deal or no deal, and pretty much know what a property is worth to you in just a couple minutes of evaluation.

In many markets you can do better if cash flow is what you are after. In other markets, this may be a really good buy.

Jon Klaus, SellPropertyFast | [email protected] | 214‑929‑6545

In my area the 2% rule would be impossible to apply, if you are serious about purchasing real estate. I have learned though how to buy sound SFR properties that generate a nice cash flow.

I buy locally and manage my own properties. Understanding your own market is extremely important. Regardless of whether you use a property manager or not you will want to know intimately the types of expenses to expect when you rent out a property.

IMO - you have given us very little information to help you in deciding if 40,000 might be a good investment. With out better facts though I would probably pass on this deal. It important to understand what your investing in and the market that your investment is in. Even if 600 works if it remains vacant half the time or requires significant repairs due to deferred maintenance it becomes a money pit.

Someone please bring me a deal that I can buy for $35K that rents for $900 per month!!!

Deals like this are like unicorns, they dont exist. The only way something like this could even be possible is if someone found and purchased the home themselves and managed the rehab and did their own management of the renter. A person can not buy this deal from a wholesale investor, pay 8-10% in management fees and expect this kind of deal.

Medium buymemphisnow stacksCurt Davis, Buy Memphis Now | [email protected] | 901‑207‑8977 | http://www.BuyMemphisNow.com | TN Agent # 00321765

Originally posted by Curt Davis:
Someone please bring me a deal that I can buy for $35K that rents for $900 per month!!!

Deals like this are like unicorns, they dont exist. The only way something like this could even be possible is if someone found and purchased the home themselves and managed the rehab and did their own management of the renter. A person can not buy this deal from a wholesale investor, pay 8-10% in management fees and expect this kind of deal.


I have 4 that are this good or better right now. However, I do find them myself, manage the rehabs, lease, and manage the properties.

Jon Klaus, SellPropertyFast | [email protected] | 214‑929‑6545

my second SFR was for 38K and rents for $850.

I would keep looking!

Medium square logo final flatMark Updegraff, Updegraff Development LLC | [email protected] | (585) 314‑9790 | http://www.RochesterInvestment.com | NY Agent # 10491205428