I’m a real estate agent and I had a client reach out wanting me to list her house. She wants $130,000, but she has a tenant in there now who’s lease isn’t up until 2022. Her tenants are reliable and pay on time, she’s selling so they can but more money towards their new build. The tenants pay 1500$ a month in rent. Great location. Updated. Would this be a good first rental to buy? I have 20k I can put down but I’d rather not put that much down, can I do concessions on the loan to put towards the closing costs?
A "good rental to buy" is relative. Have you first thought about your long terms goals or your potential investment strategy? Do you want to invest for appreciation or cashflow?
My recommendation would be to take the numbers on this property and run it through the BP rental calculator. If you need a general starting point I would look up the 1% rule to see if this properties makes it. Also, after running it through the BP calculator see what your cash on cash return is. Personally if you are getting in between 10-12% its a decent investment and 15% is a good deal.
Lastly, yes you can ask for concessions but it will be based on what your lender allows. I have used one lender who only allows for me to ask for 2% back in closing cost and another who allows for 6%.
If you need more feedback, I would recommending running it through the BP rental calculator and sharing the report back via this post or in a new post. I am sure you will gain good feedback from that.
“Seller to pay XYZ dollars towards closing costs, prepaid, and escrows”. Check with your lender to see what the max amount is, usually it’s 3-6%, but most closing costs total to $3-4K. Normally you’d add that on top of the purchase price I.e $130 + 3k = $133k x 20% down payment. You could even spin in “well you were going to list it for $130k and pay 6% realtor fees, if I buy it you’ll pay no realtor fees but you’ll only pay my closing costs.
What I’d really recommend is pay yourself a 6% commission on the deal + add closing costs to the purchase price so you’ll only be putting about 14% down assuming a 20% down payment
It’s a 1 % rule rental which if it’s in a good neighborhood should be good. I’d run local comps there to see
Hey Allie! To me that seems like a good buy, but as you know it depends on the taxes. There are banks right now that will do a convential loan with no PMI fo 10% down payment. With the down payment of 13k it will leave you 7k which should be fine. PM me for more info. Also the max concessions for NY is 6%, but to be honest with you they way the market is right now I wouldn't bother.
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