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?
You must be a BiggerPockets member to post on the forums
Join the world's largest, most open Real Estate Investing Community online, 100% free forever!