I am looking at this deal and wanted to get feedback from the BP community as to their thoughts on this deal.
This would be my first deal.
I like to have a cap rate that is 3 percentage points above my cost of money. If you feel good about the expenses then you make it. Since this is a buy and hold I am not concerned that there is no immediate equity.
Why such a large down payment? 30%?
Are you managing the property by yourself?
Is 57K the asking price?
What is the area like? Are you going to have a lot of repair and vacancy costs due to your clientele? Any large repairs for the house coming up?
The numbers are exactly what I look for but the properties tend to be in Class A neighborhoods. Many of the people on here that buy those types of houses like much higher cap rates and cash on cash return. Just a thought.
The first one is always the hardest getting your feet wet.
Purchase price + rehab equaling ARV is not the most favorable but I would still proceed if you are confident about the area, the ability to get good tenants, see a good chance for appreciation, and if you are in for the long haul. Buying at ARV means you have to hold it for a year or two depending on the market to just to get your money back after selling costs.
@Terry Hershberger sorry I need to repost. I am only going to put down 20% and the asking price is around $65,000 but I am in the process of negotiating.
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