I have a property identified for potential purchase.
1920 2bed/1bath new roof, pipes, water heater.
Nice wood floors and woodwork throughout.
Comps support 24-27valuation
Rented at $550
Management $75/month(prop. manager's min.)
Distressed sale, needs "no" work, tenant in place.
Planning on no money down 15yr loan at 6%
This deal passes the standard rules of thumb: 2%, 50%, 70%
It fits my strategy of not wanting a bunch of debt long-term (I could pay this off pretty quick)
I have some other(3-4bedroom) houses nearby that stay occupied. It's not he best neighborhood, bit it's certainly no war zone. (there is a section of town that houses go for 5k)
What are your thoughts on the deal? I like the house, but I think sometimes with fixed costs it's hard to make money with lower rents.
I do long-term buy and holds.
if houses go for 5k then why pay 16k? 550 also seems low for rent and 75 seems high for management
I was making the 5k comment as a neighborhood comparison. Houses don't go for 5k in the neighborhood in question.
550 is about market rate(maybe on the low end) for a 2 bedroom in this area.
You already out 100 a month on t and i, pluse what you will be paying at 6% over 15, leaving little room for vac/maintenance. I would worry more about how well it matches what you are looking to do then any of the rules you listed above. @Jassem A. it all of what you mentions is dependent on location. He mentioned comps support 24-27k. Its just the same as in our area- house in North End and Ocean Lakes are going to sell at a lot different price ranges/
I see about a 16% cap property with a cost of money at 6%. That is great. Even with no money into the project you should get about $95 per month cash flow. My only concern would be is this too small a deal to bother with? If not, take it.
Yeah - another buy and holder! Distressed owner sale, then? The property doesn't seem distressed. I have sticker shock. Here I am lucky to get a single-family for 110x rent (that's why I am a multi-investor, mostly!) The mgt fee as a % is huge, but I can understand the mgr needing a minimum. Costs per unit should drop as you grow. Is this property in your area? If so, I would manage for myself. Could someone explain comps support '24-27' valuation? Thanks!
16k, $550 in rent. you already work the neighborhood. no money down. paying tenant in place.
What more does one need to pull the trigger?
Join the Largest Real Estate Investing Community
Basic membership is free, forever.