First Investing Property Analysis in NC

[Adrian DeGraff]

I wanted to see if I did this correctly and then get next steps (because my situation is kinda hard to figure out).

Tennessee Avenue - Middle class neighborhood within driving distance of a local university.

3/2 1050 sqft

List price: 65,000

Mortgage Payment: 263 (20% downpayment, 30-yr fixed @ 4.5%)

Rental Prep Fund: 2000

Est Rent: 925 (backed by rentometer and craigslist ads, also I'm familiar with the area.)

COC based on 50% Rule: 12.49%

(actually it's 13.88% but I'm counting 90% vacancy even though it's covered by 50% already)

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Cost Breakdown

Taxes: 94.16 (based on 2013 and 2012)

Insurance: 60 * - need to follow up on this.

Property Mgt: 92.5 (10% of monthly rent)

HOA: none

Repairs: 92.5 (10% of monthly rent)

Vacancy: 92.5 (10% of monthly rent)

Total Est Expenses: 431.67

Remaining Monthly Cashflow: 230.33

Annual Income: 2763.96

Initial Investment: 17200

Cash on Cash: 16.0%

Cap Rate: 9.12%

I feel like i'm being conservative enough, but I just wanted feedback. As long as they don't break the stove each month, I think 10% is reasonable for repairs (the property is in relatively good condition). Vacancy I've usually heard is around 10% as a starting estimate. This is an area that's common for renters and with the student population within driving distance, I think it'd be justifiable. Even the mortgage rate is .2% higher than the average for NC right now.

All this, but I don't have enough for the down payment. I just bought a house and I don't have nearly enough for a 20% down payment. Would this be something for a portfolio lender to look at? Do I even think about looking at those birdcage line...I mean credit card offers in the mail?

[Adrian DeGraff]

@Kevin Fletcher I'd probably take your first suggestion and budget a spare 5K per property. I have an emergency fund, but I'd rather have a seperate one for investing.

@Dusty Corning Right now, I'd like to get more experience and make some more connections before involving family. I have started mentioning this to friends, but not put together anything presentation worthy. I'm joining the TREIA soon.

@Chris Martin It's not in Wake County, but I have been looking there as well. Do you still want an email?