Is this a good investment?

[Tarvis Carson]

Hello,

I am analyzing a deal for a SFH. The home is a 3/1, 903 sqft, built in 1960 and its listed for $89k.

The interior has been renovated for the most part with newer appliances. The exterior lawn and pavement could use some touches but it looks like I could make around $900-1000 in monthly rent income. Other homes in the area sell for around $95k-115k.

With those number it would meet the 1% rule, my only concern is the age of the home and it has what looks like an HVAC unit on top of the roof which is outdated and I’m not completely sure on the costs of upgrading the HVAC system will be.

So my question is would this be a good deal at $89k from what I explained? Thank you.

[Evan Polaski]

@Tarvis Carson 1% rule only works in certain scenarios, so as Joseph mentioned, you need to nail down your expenses. For me a typical HVAC system runs about 6k for new furnace and AC. That being said, from a BRRRR standpoint, this is not a good deal (I mention because this is the BRRRR forum). You are paying $89,000 for a house that likely needs 5-10k of work based on what you described, and would be worth what you have in it.

From a long term hold perspective, you need real numbers. Generally, I would say this is a pass. I don't know what your PITI will be, but looking at 10% management fee, 5-6% leasing commission, 5% vacancy, 10-15% repair and capex reserves (this is probably light), thats $350/mo in expenses. PI maybe $350, Insurance $100, Taxes seem to be about $200/mo. You have $0 left.