Investor · grand prairie / st.louis, texas/ Missouri · Member since 2014 · 168 posts · 19 votes
I have this landlord who is considering selling his home, it is free and clear, plus a cash flow of 1200 a month. he say he will move for 145k, and I said if I can get somewhat close to that would you consider? he said he would , so what do you propose i do?
Realtor · Fresno, CA · Member since 2013 · 471 posts · 225 votes
10y
It can work , but you have to run your own numbers to see what YOUR cashflow will be. Start with the terms of the mortgage - how much will you be putting down on the property? And is he going to carry the paper? Once you know your down payment, and length of loan and the interest rate - you will know your monthly mortgage payment. Then calculate you taxes - not sure about your location but in Fresno its 1.25% of the sale price. Lop on your insurance and then get any and all expenses from the last two years that he should be able to provide you with. If after those numbers are run and it still makes sense to you then make your move. Always remember when buying a house that their so called 'cash flow' is a reflection of their situation - being that the house is paid off - he can claim a much higher cash flow than you would - unless you too were buying all cash. Good luck and keep us in the loop!
Property Manager · Indianapolis, IN · Member since 2010 · 1k+ posts · 1k+ votes
10y
It cash flows $1200 a month? Highly unlikely. Make sure you account for all expenses. Did you mean rents? Check some of the other forums here for general expenses. A starting point is the 50% rule.
It cash flows $1200 a month? Highly unlikely. Make sure you account for all expenses. Did you mean rents? Check some of the other forums here for general expenses. A starting point is the 50% rule.
you are right , it rents for 1200. i guess minus insurance since there is no mortgage. and thanks for the advise
Realtor · Fresno, CA · Member since 2013 · 471 posts · 225 votes
10y
It can work , but you have to run your own numbers to see what YOUR cashflow will be. Start with the terms of the mortgage - how much will you be putting down on the property? And is he going to carry the paper? Once you know your down payment, and length of loan and the interest rate - you will know your monthly mortgage payment. Then calculate you taxes - not sure about your location but in Fresno its 1.25% of the sale price. Lop on your insurance and then get any and all expenses from the last two years that he should be able to provide you with. If after those numbers are run and it still makes sense to you then make your move. Always remember when buying a house that their so called 'cash flow' is a reflection of their situation - being that the house is paid off - he can claim a much higher cash flow than you would - unless you too were buying all cash. Good luck and keep us in the loop!
Investor · Knoxville, TN · Member since 2012 · 33 posts · 16 votes
10y
I'm afraid you're still missing much of your expenses in only considering insurance but @Jay Orlauskihit some of them. The state of TX property taxes are much higher than the 1.25% mentioned as CA has a ceiling of how much taxes can be raised each year thanks to CA Prop 13 enacted in 1978. TX has higher property taxes to offset no state income tax along with other lower tax rates respective to other states. Research your tax rate to get an accurate idea! Also consider the costs of property mgmnt (+/-10% of gmr), vacancy rate (area specific, but 7-10% of gmr is a good start), and have a good home inspector do a once over so in case you missed something you can haggle and have an idea of potential upcoming repairs. We all miss stuff. If you want to verify that $1200mo rent the seller mentioned, you can call around to local property mgmnt companys and get a second or third opinion too. Get the clearest possible idea of real world cashflow before you invest. Sounds like you found a good opportunity though! Good luck!
Investor · Knoxville, TN · Member since 2012 · 33 posts · 16 votes
10y
Curiosity got the best of me. I just ran a google search for "Texas property tax rate" and found all kinds of good stuff. These seem to be in your neck of the woods. Based on 145k assessed value; Dallas county = 2.186% = $3170yr, Ellis county = 2.339% = $3392yr. It's different by county AND zip code so these may be off a bit but will get you in the ballpark.
Agent/Investor · Murphy, TX · Member since 2013 · 542 posts · 304 votes
10y
Originally posted by @Account Closed:
Curiosity got the best of me. I just ran a google search for "Texas property tax rate" and found all kinds of good stuff. These seem to be in your neck of the woods. Based on 145k assessed value; Dallas county = 2.186% = $3170yr, Ellis county = 2.339% = $3392yr. It's different by county AND zip code so these may be off a bit but will get you in the ballpark.
It varies by by city and school district too. Those numbers are a bit low. I have a property in the city of Dallas appraised at $125k and my taxes for 2015 were $3,570.
$1200 for a $145k house is way to low to cash flow unless you are going to put down a lot of cash. What do the comps say it's worth?
Investor · Dallas, TX · Member since 2014 · 2k+ posts · 1k+ votes
10y
You don't have to worry about tax rates. Simply go to the Dallas Central Appraisal District's site, enter the address, and it will tell you precisely what the annual tax bill is.
Investor · grand prairie / st.louis, texas/ Missouri · Member since 2014 · 168 posts · 19 votes
10y
great advise everyone. he is renting lower than rents in the area. I was thinking buying and then owner financing to the current tenant for the right rent of the sales price i sell it to them for, if they can afford.
I have this landlord who is considering selling his home, it is free and clear, plus a cash flow of 1200 a month. he say he will move for 145k, and I said if I can get somewhat close to that would you consider? he said he would , so what do you propose i do?
Don't forget the high taxes and insurance in texas. We have looked in Kingville area of texas but the high taxes and insurance have been the barriers to entrance for us.