Potential first Buy and Hold Deal

[Tyler Haskell]

Hello all,

I was presented with a tentative offer for a buy and hold property in Sacramento, and am looking for some guidance on if this seems like a decent investment:

Property is a SFH in a Class C neighborhood. Built in 1983, it is a 2/1 and about 821 SQFT with 230 SQFT for the garage. It is in a HOA of about 10 units. I have not seen the inside and have minimal numbers:

I can negotiate the price to $75000 - 85000

Currently renter occupied at $700

average rent within 1 mile is $860

I am told there is no rehab work needed, and the renter would be staying.

Principle and interest with 25% down or $18750 is $270 a month

HOA dues are $95 a month, renter pays utilities.

I have only estimated taxes and insurance at $150 a month

Not sure about closing costs or other fees yet.

By those numbers total monthly expenses would be around $515.

Cash flow is $185 a month.

Comps and other estimates put the retail value at $90k

Anyways, These are only rough numbers but the seller needs to know within the next couple of days if I am interested. Anything else I should be considering for expenses? How do the pictures look? What do you guys think?

Thanks!

[Ryan Owen]

@Tyler Haskell

As the other posters have stated, taking over someone else's Tennant can be a risk. Do you know why the current owner is selling? How long has the current renter been in place and how long has the rent been at 700 (especially since the area value are quite a bit higher). Any deferred maintenance? I have seen several deals where the current owner's view of "no rehab needed" is a stretch of the imagination.

Lastly, what are the HOA's responsibilities? From the pictures, I'm not seeing a whole lot of common area maintenance.

Overall the deal sounds a bit on the thin side.  I'd look hard at the risk reward and take a pass if it doesn't add up.

Good luck!