Malden, MA · Member since 2016 · 6 posts · 2 votes
so I've been eyeing a property in the next state. it was on the market for 20k and seemed like a great rental opportunity. This would be my first investment so I believe I would feel more comfortable with something on the cheaper side to get my feet wet.
the price was just dropped to 15k and I want to take the plung!
The mortgage would look something like this:
133$ total estimated mortgage , 52$ principles and interest, 15$ taxes, 67$ homeowners insurance
local 2b 2 baths rent for around 150$ per night
Im thinking I cant really lose although I have to do a lot more due diligence on the current state of the house but from what it looks like, it doesn't seem to need much.
You do have a lot that you could lose! Why is the property just sitting there and keeps dropping in price? Is it in livable condition? It may not be financeable. If you get stuck with a house that won't sell or you can't rent out, you still will have tax bills or insurance bills. If it is in a bad area than the property can be destroyed and broken into whenever it is vacant! How much is it going to cost to keep it rented? Who will manage it? I would get in touch with a property manager in the location and get opinions of the area. Where is it located?
Not too detour you, but there are some very bad investments out there! Trust me, I have one. :-( ....... I bought for $46k and it cost me almost $60 to get up to code and have the city stop coming after me for a c of o......... It brings in $1350 a month and if I were to list it for sale, my tenants would most likely destroy the place and leave......
You do have a lot that you could lose! Why is the property just sitting there and keeps dropping in price? Is it in livable condition? It may not be financeable. If you get stuck with a house that won't sell or you can't rent out, you still will have tax bills or insurance bills. If it is in a bad area than the property can be destroyed and broken into whenever it is vacant! How much is it going to cost to keep it rented? Who will manage it? I would get in touch with a property manager in the location and get opinions of the area. Where is it located?
Not too detour you, but there are some very bad investments out there! Trust me, I have one. :-( ....... I bought for $46k and it cost me almost $60 to get up to code and have the city stop coming after me for a c of o......... It brings in $1350 a month and if I were to list it for sale, my tenants would most likely destroy the place and leave......
I suspect the home needs a substantial amount of work if it is being sold at that price and has been sitting there. I cannot tell you how many times I've seen pics for a property and thought, "Hmmm...well that doesn't look too bad." Then I go to view it and it is a totally different story. Or its in an even worse neighborhood than I was expecting. Often both, lol.
You say that it could rent for $150 per night. This means it is not a place that people will live in but will rent for vacation. Is this at a destination place? Most places have a high season and a low season. During high season it may rent for $150 but only rent, if at all, for $80 during low season. Also, I would only count on 1/2 the days being rented.
Where management costs may average around 10% on regular rentals it will be 30-40% on vacation rentals. If you are self managing housekeeping fees will probably be $50-$75 per time.
There may be special taxes on short term rentals. We pay city, and county on monthly basis. We also pay state taxes on a quarterly bases. This is before Federal and maybe State income tax.
We try to find short term rental and 5 to 6 times yearly gross rents. Be sure to count the purchase and fix up cost. I also want to make at least 3 percentage points above my cost of money.