Is this a good opportunity for my first rental?

Question

Looking for my first rental property. Found one in Augusta, GA. Seller financed. $2k down, $300 a month. Thinking of putting in a couple thousand and renting it out for $500 to get my feet wet. 10% towards property management as I am in AZ. Would fly in to do all the work. I am 19 and just got my first auto loan a few months ago so do not have enough established credit to get a mortgage.

Would this be wise?

https://www.zillow.com/homedetails/1638-Douglas-St...

Any opinions or tips appreciated!

Would this be wise?

https://www.zillow.com/homedetails/1638-Douglas-St...

Any opinions or tips appreciated!

Brad L. · Answer

The listing mentions $310/month plus taxes and insurance, so I don't believe renting it for $500.00 would cover even just your payment plus taxes and insurance. This also doesn't take into account CapEx, repairs and vacancy. Take a look at the Rental Property Calculator under the Tools section when you have some time.

I'm sure you're eager to get your feet wet, but sometimes your best investments are the ones you don't make (I'm sure this is a quote from somewhere but can't remember where). Keep saving your money, continue educating yourself, and run the numbers on every property you see to get familiar with what you can afford and at what prices you'll be profitable. For example, I know that in my area I need to purchase a 3-bedroom SFH for $xx.xx if I want to cash flow $xx.xx while charging $xx.xx per month in rent. It saves me a lot of time by immediately knowing I can skip over properties priced way out of that range.

Andrew Johnson · Answer

@Matthew Parkhurst This is *probably* about as bad as it gets for you.  Take a look at the price history.  This property is on the market LITERALLY EVERY SINGLE YEAR.  It goes on the market, then off, sometimes it sells, sometimes it doesn't.  If you were local, an experienced investor, had a lot of cash on hand for repairs, etc. then maybe you take a look at something like this.  And odds are the local market has taken a look at it...every single year...and passed.

Not to mention that you'll never be able to get a mortgage on a $26K property.  The loan minimums won't qualify for a standard 30 year fixed rate mortgage.  So even if your credit history does improve over the next __ months/years the property itself won't qualify.

Not to further mention that you'll have to fly out to see the property, fly out to "do the work", and maybe fly out again at some point.  All of a sudden you'll have $2K in flights (easily) and once you throw in a rental car, hotel night(s), food, etc. you'll have 10% of your purchase price just in travel.

Anyway, I'm beating a dead horse but this sounds like a horrible idea to me :-)

Thomas S. · Answer

It will not have any positive cash flow and as mentioned there is likely something wrong with the property.

You should consider purchasing something you can self manage after you learn much more about finances and income investment properties.

Ryan Murdock · Answer

@Matthew Parkhurst If your payment is $300/mo and you can only rent for $500/mo that doesn't leave much to cover taxes, insurance, and what will likely be numerous repair bills given the condition.

The biggest red flag I see, however, is the fact that it's been listed for 458 days and nobody else grabbed it. I don't know anything at all about the Augusta, GA market but I can guarantee you that for one reason or another, probably several, this property is over priced.

Carlos Zapata · Answer

Before been an investor, I was an agent,  I use the commission to make my investments.  go to google alerts,  try to go to one REIA meeting in the area you want to invest in

Matthew Parkhurst · Answer

Would you recommend me getting my real estate license? Arizona's market prices is a lot higher but I could look in Texas. What is a good way to learn more about all of that without living in the area for long?

Carlos Zapata · Answer

@Matthew Parkhurst   Congratutuins, you are doing your first step,   I would not do a long distance investment if this is your first one,  you can find good deal closer to your home,   before moving forward with any purchase  try to learn about the market, population, drivers,  you can fix a property but you cannot fix a market

good luck

Is this a good opportunity for my first rental?

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