First Time Homebuyer Evaluating a SF house for BRRRR in HEB

[Chris Vanderberry]

Hey BP community,

I'm a first time homebuyer that wants to make my first home a rental down the road and I'm evaluating a property in Hurst that I have an opportunity to jump on pre-market.

Here are the details on the house:

1316 Redbud dr. 

3bd/2bath

1910sqft, 

10+ year old AC/Heat system

4 yr old roof

old water heater

The house needs new floors in all bedrooms and the kitchen needs updating.

Enclosed rear porch.

The comps in the immediate area, based on my rookie evaluation came out around 220k and they want 230k for the house as-is with a lease back option for a couple months to accommodate my upcoming wedding. To me, that price seems high for what the house is and given that there is still a lot of work that needs to be done on it. Am I way off base?  

Any wisdom would be helpful and I'd love to make some connections for more learning! 

Thanks everyone! 

Chris Vanderberry

First Time Homebuyer in DFW

[Bruce Lynn]

Just a couple of ideas.....one is the house you buy to live in is not necessarily the one that is a prime rental in the future.   That's my first thought with this house....for a good rental around this parts I would like to see the price point much lower.  My goals for rentals is if you pay $220,000 you want to be somewhere around $2000-$2200 for rent.....that might be tough in this area.

So a couple of ideas for you.  One is if that is where you want to live.....buy it and live there.  Build some equity.  Make some upgrades and sell it down the road and invest the profits.

If you want to buy a rental and live in it first....then buy cheaper....much cheaper if you can stand it.

While some people have traditionally bought, then moved, and rented the old house, you can also loose your nice capital gains exemption this way.   So something to think about.   One bonus is you might be able to use less down payments as you move forward since investment loans might require 20-30% down and owner/occupied loans might require nothing down...or 3-5%...depending on where you buy and your income.