First deal - home inspection advice needed
So i am working on my first rental deal. It’s a 3 bedroom one bath PLUS an additional 600 s.f. structure on site (additional structure needs finished out which I am planning on being a studio apt). According to the bp calculator my cash on cash investment with both structures rented would be 15% given my realtor given market rental prices.
Home inspection was completed yesterday and I have to admit I am a little concerned. I’ve since asked for further clarification but I have two major concerns. 1.) the 2 ton HVAC condensing unit is inoperable.
2.) their is a 100 amp sub panel only being supplied with 50 amps. I know it depends on what the sub panel is supplying whether or not it is a concern. Hence the needed clarification. And a couple structural issues - 1 rotten rafter and a a rotten sill board....
I suppose to summarize my question or the reason I began this topic is this:
Given there are rarely ever any perfect homes esp in rental properties,at what point does repair cost make a property outrun profitability?
The two structures(if both are rented) would gross me approximately $1500/mo with my escrow running around $600. Contracted Purchase price is $70k
The initial cash investment with dp and repairs will be around $25k - IS it worth it or will $25k be better spent in a totally different property?