First Deal: Did I do alright?
First off, thanks to the community for being such an invaluable source of information for a first time investor. I've been lurking for a while and finally pulled the trigger thanks in large to the information gleaned from individuals here on BP. So here's the long and the short of the deal.
HUD SFR 3 br 1 ba house listed for $73k
Bid accepted price is $67k all in with closing.
Paying "cash" using a 4% fixed HELOC I have on a separate property I own outright (current residence).
Potential Rents are conservatively $950 a month.
Property needs $8-10k in repairs.
ARV: $95-100k
The good news:
My Bid got accepted and all my financing is already lined up. My agent has experience with HUD and walked me through the process, so I have a very good feeling about actually closing on the home.
I'm very confident about the rents. I called on a 2br 1ba for rent with less square footage with just a street over and despite having a sign in the yard the property had already rented for $985.
The bad:
While my agent has experience with HUD, I do not. I understand that if the contract submitted is not exactly correct, the property will go to a backup bidder. I'm a little nervous about this.
Repairs - I'm also a little nervous about this. I have a solid home inspector who I feel comfortable with (he's worked on family rental property for 20+ years), but I don't know much about repairs, so even though I trust him, I'm worried the repairs will come out to more than we expected.
The Twist:
I got the house as owner-occupy. The reason I did this is because I'm young, single, live pretty simply, it doesn't disrupt my life too much to pick up and move, and the property was in a desirable location so I knew it'd go quickly if it went to open investment. I kind of like the idea of house hopping actually. So I'll be moving out of my current residence, into the new place for 12 months. Expected rents on my current house are $800 a month. It's in the local university district so it's likely I'll deal with a college tenant that will last 1-2 years at most.So for 1-2 years I'll be taking in a lower rent due to the owner occupancy requirement on the hud home. Then I feel like this deal gives me a lot of options. After 1-2 years I can:
1. Exit the property completely via selling and still put 15-20k in my pocket.
2. Continue as is by taking the $800 on the first property if I decide I like living in the new home better.
3. Move back to the old home and take the higher rents on the new HUD purchase.
4. Find a new property between now and the end of the owner-occupancy obligation and move into it as my new personal home.
All and all, I've tried to make my numbers as conservative as possible (overestimating repairs by 20% or so, underestimating rents and ARV) and I look at this property as a very conservative "first run" at real estate. I think I'm doing it right, but in my mind, I'd be crazy not to ask for advice here from infinitely more experienced peers in all facets of real estate. So any feedback would be appreciated!