To buy or not to buy
Hey everyone! My wife and I are considering a deal and would love some feedback. We just finished our first flip in the Charlotte area on budget, under our holding time and sold it for more than we estimated. All in all it was a great first flip! Our goal in 2018 was to flip at least two homes and purchase one rental property. Right now we live in a great neighborhood in Indian Land SC, right across the NC/SC border. Our neighborhood has townhomes at the beginning of it and they are never for sell. They rent well, and when they list to sell, they're gone in under a week. One just happened to open up yesterday and we're considering making an offer. Here are deal specifics:
Purchase Price - 145k with 20% - 25% down (we think we can get it for less since my wife is a realtor and won't take the commission)
Only paint and carpet cleaning needed - do it myself but still budget in $1500 just in case
I'm estimating 8.3% vacancy, 5% R&M, 5% Capx
HOA - $120/month
Taxes - $1000/year
Insurance - $850/year
Rental Income - $1200-1300 (we think 1275 is reasonable)
With 20% down (roughly 34k with closing costs), we're looking at $200 positive cash flow after all expenses and PITI and roughly an 8.5% ROI
With 25% down (roughly 42k w/closing costs), we're looking at $300 positive cash flow each month but only a 7.1% ROI
The benefit here for us is that we are less than a mile from the townhome and drive by it every day. I'm on the HOA for single family homes in our neighborhood and have a good sense for the townhome HOA. I get this isn't the greatest deal out there, but for us it accomplishes the goal of owning a rental with as little headache as possible.
We also have a good pool of investors, so tying up our own cash in this deal won't hurt our flipping interests. And we'll still have excess cash to do deals as well. What do you guys think? Good or bad idea. Please ask questions and poke holes in my thought process!
Thanks in advance!