Looking for your thoughts

[Andy Robison]

Here we go, after reading BP for a year and finally moving to a position that I can get together the funds to buy my first SFR home. I know BP has a love affair with MFR but I cant bring myself to buy one for my first purchase, the extremely conservative side of me just won’t let me do it. So I’ve gotten a list from my agent and I want to bounce some numbers off of everyone here.

First home is a 3 br 1 ba house in a C+/B- neighborhood asking
purchase price is 35,000
repairs high side 15,000
Total cash invested +closing 54,000 closing
20% down
30yr fixed rate mortage for 28,400
Taxes 786/yr (has gone up $2/yr for 3 years previous
new siding/roof/hvac
Estimated rent 800/month Little less than what everyone else is in the area but again I like to plan for the worse. I cant see this house renting for less than $800.

SO… if everything goes well. I’m thinking this.

800/month rent (low)
300/month for mortgage and taxes (high)
That’s $500 for everything else/month would this I’m not looking to make bank on this first house I’d just love not to try and fail within months. I know winter is coming up and I can afford to do the repairs and hold the home until the spring or after the holidays when I can get in a qualified renter. SO BP tell me what I’m missing. I’m still seeing 3k/yr using the 50% rule is not a bad return for my education for a long term buy and hold.

[Michaela G.]

Are you sure that you can get a mortgage for 28K? Most banks don't really want to go through the hassle of doing mortgages less than 40K.

Also, This is your first investment, so be prepared for your rehab to be more than what you're budgeting. It's so easy to go over, no matter how well you estimated. This is obviously not just paint and carpet, but more involved.

That cash will be tied up, because it'll be difficult to refi very soon. You'd be in at almost 22K cash - almost half.

You might be able to buy two 50K houses with 10K down each and then mortgages at 40K each - provided that you can get 80% mortgages on investment loans.