Engineer 路 Pickerington, OH 路 Member since 2014 路 17 posts 路 3 votes
Would you do this deal?
Two Storey Single Family Home in a quiet neighborhood
Square Footage: 1244 sq/ft
2 Bedroom
1 Bath
Detached Garage
New Roof
New Central Air
No major repairs needed
Lancaster, Ohio 43130
ARV: $74,000
Asking Price: $74,000
Property Taxes: $1929/yr
Repairs: $0
Rent: Currently renting at $650 /Month... There is already a tenant and they pay all utilities, too.
I guess it was in the family for 57 years, the mother just passed away, and the two childeren want to unload all of the rentals. Also, what kind of offer price should I make?
Flipper/Rehabber 路 Spring Hill, FL 路 Member since 2014 路 234 posts 路 132 votes
12y
I'm just starting out, so consider that when reading my answer :)
I won't consider a house which I can't get 1-2% of the purchase price including cost of repairs per month. If I can't, I move on to analyze another house. You will need at least $740/month rent at the asking price. If all you can get is $650/ month then don鈥檛 pay over 65k. Hope that helps, others might have more insight. Good luck!
Investor 路 Winston Salem, NC 路 Member since 2013 路 93 posts 路 25 votes
12y
@Carlo Santarelli That deal is too tight in my opinion....that is unless market rent today is +$850 and you can push rents in future years. Given the square footage have you looked at making it a 3 bedroom? It seems to me that the size should justify a 3rd bedroom and market rent has to be higher for a good 3 BR house.
Flipper/Rehabber 路 Spring Hill, FL 路 Member since 2014 路 234 posts 路 132 votes
12y
I'm just starting out, so consider that when reading my answer :)
I won't consider a house which I can't get 1-2% of the purchase price including cost of repairs per month. If I can't, I move on to analyze another house. You will need at least $740/month rent at the asking price. If all you can get is $650/ month then don鈥檛 pay over 65k. Hope that helps, others might have more insight. Good luck!
Engineer 路 Pickerington, OH 路 Member since 2014 路 17 posts 路 3 votes
12y
A little update on the $74k house...
I spoke to the owner today and this particular house has been in the family since 1900. I must say it looks really nice from the outside. Their mother began renting it out in 1957 and it has only had 9 tenants since 1957.
Most of the major mechanicals/expensive items have been updated such as:
New Roof 7 years ago
New Hot Water tank
New Plumbing this year
Foundation Repairs last year
New Air Conditioner Condensing Unit today
I also asked him his bottom line and I think that I will be able to get him down to $65k.
Does this change anyone's answer?
@James Wise and @Jared Rogers I agree with you guys 100% about paying 74k to get $650 but do you think the fact this place has a quote "awesome" tenant that pays on time would change your answer? Also, I learned the tenants mother lives next door so I really don't think she will be moving anytime soon. And, the current owner already has established handy men and other contractors. Do you think that is worth something for a newbie or am I placing too much value on that stuff? Ugh! this first buy is SO STRESSFUL!
@Amanda Sutherlin Thank you for your input as well. I take everyone's input into account and since this could be my first deal I don't want to mess it up! I will definitely try to talk him down to 65k!
Investor 路 Winston Salem, NC 路 Member since 2013 路 93 posts 路 25 votes
12y
@Carlo Santarelli still sounds tough to me...the numbers are tight and old homes always need repair and are more costly to repair as well. Sounds like it is owned free and clear maybe more interested if you get good seller financing. The children may want to sell for the management issues but appreciate a monthly loan payment.
Contractor 路 Scottsdale, AZ 路 Member since 2010 路 2k+ posts 路 3k+ votes
12y
I'm with the others, the numbers sound too tight to make sense. I'll tell you this - If I could get a nice, updated, well maintainined SFR in a decent neighborhood for $65k that generated $650 rent in MY area, I would be very interested.
But if what @James Wise said is true(that you can get upwards of $1,300 / month for a house at this cost), then you need to pass on this one.
Engineer 路 Pickerington, OH 路 Member since 2014 路 17 posts 路 3 votes
12y
You guys are awesome! I seriously would have thought it was a good deal if it wasn't for BiggerPockets. I will move on to the next opportunity.
@Kathy C. Most of the homes in that area are selling around 75k-80k. I am also too conservative to bet on house appreciation, even though it is a nice area.
Engineer 路 Pickerington, OH 路 Member since 2014 路 17 posts 路 3 votes
7y
I am in the Columbus Ohio area looking at a duplex. It is currently renting for $700 per month each side. There are tenants occupying both sides. One has 11 more months and the other has about 7 more months on their leases. I have met them both an they both seem content. The purchase price will be 125k. I will be financing the deal at 15% down over 25 years at 6.25%. The property could probably use about 10k of improvements but wouldn't be necessary right away (the current tenants expressed happiness). Do you have any thoughts? Is it a good deal?
Flipper/Rehabber 路 Columbus, OH 路 Member since 2015 路 16 posts 路 11 votes
7y
@Carlo Santarelli if you use the 1% rule, either the sales price is too high or the rent is too low. I don鈥檛 know that area well enough to understand where rent should be.
You also mentioned that the kids want to sell the rentals, does this mean more than one?
Engineer 路 Pickerington, OH 路 Member since 2014 路 17 posts 路 3 votes
7y
@Brian Fisher thanks for the tip. I was thinking the deal was just "okay". The difference would be about $550 leftover each month for repairs, savings/profits. Do you think that's too close?
Flipper/Rehabber 路 Columbus, OH 路 Member since 2014 路 161 posts 路 116 votes
7y
For comparison, I just had a buyer close on a duplex that was rented for $1250 ($625 per side) and he paid $90k. Killer numbers and the house is in excellent shape.
@Mark Fries Sorry I'm a young newbie and never invested in any real estate. But just a little question: You are stating that you can turn a 90k into $1700 in JacksonVille FL. But isn't JacksonVille logically a more expensive city to rent an apartment from than Columbus since its certainly a more "attractive city" and has a higher demand for rental? I just compared prices between Columbus Ohio and Jacksonville and the difference is clear for a 2 bed appt.
@Mark Fries Sorry I'm a young newbie and never invested in any real estate. But just a little question: You are stating that you can turn a 90k into $1700 in JacksonVille FL. But isn't JacksonVille logically a more expensive city to rent an apartment from than Columbus since its certainly a more "attractive city" and has a higher demand for rental? I just compared prices between Columbus Ohio and Jacksonville and the difference is clear for a 2 bed appt.
Contractor 路 Jacksonville, FL 路 Member since 2017 路 1k+ posts 路 2k+ votes
7y
@Jay Arif
I have never been to Ohio so I don't really know what stuff rents for up their or what you can buy homes for.
I know that I just bought a quadruplex here in Jacksonville in a B class area for 100k and the rehab was 30k and I'm grossing 3200 a month, netting 2800... Of course this deal was like a unicorn but I still find them..