Are these good rentals?

7 Replies

Hi, I’m new to real estate investing in the rental world. My goal is to grow a rental portfolio as much as possible. I️ have found two potential townhome rentals in the same complex. I️ can pick them each up for $150k. I️ know they will rent for $1700 per month. I️ think they each need about $5k in upgrades prior to rental. They are located in central Phoenix. The HOA is high (about $400 per month) but I️t includes electricity and water. Also, the taxes are $600 annually. My questions these sound like profitable rentals? Also, I️ want to put little to no actual cash down, anyone have any good strategies that would be good options in Phoenix (sellers are not willing to finance)?? Looking for any advice!! Thanks!
I don't like HOA and condos unless buying entire complex but my geographic location is different.

@caleb and @al - what are some creative ways to finance rental properties that you have come across or even used in order to put little to no money down??

I️ have been trying to find seller carry deals but those are few and far between and they usually want high interest rates and short terms so I️t seems like getting a mortgage through a lender is a better deal...

I will echo the anti HOA sentiment. one rental HOA just notified us of a special assessment AND am increase in the monthly premiums. They do generally have a low cost of entry but not necessarily worth it.

Do you have a mortgage? If not, fha, 203k.
Find a partner.
After the 5 k to fix what is the condo worth?

For the sake of being repetitive, be very careful with HOA's as they have very strict rules when it comes to condos. Not to mention the special assessments can wipe out years of cash flow.

With that being said, on the surface these properties sound profitable but based on loose analysis, once you factor in property management, vacancy, maintenance, insurance, etc, the property isn't very profitable. I use conservative numbers when I evaluate properties, but I would think this cash flow around $100 a month give or take a few bucks based on how you underwrite deals. Just remember that the less you put down, the smaller amount of cash flow you can count on.  Hope this helps.

I haven’t used any creative financing yet. 20 percent down on each one. The only thing I’ve been doing is buying cheaper houses in good rental markets, ranging from 40-80k each

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