I think that I have found a good deal on a property, but as this would be my first deal I wanted to run the numbers by some more experienced investors.
House is a 2 unit - 3bed/1bath per unit. Interior of house is ready to be rented but it does need a new roof and the second floor porch may need some boards replaced. I would live in one of the units with my current roommate. Rents are approx. 700-800/month for each unit.
70,000 purchase price
14,000 down payment (20%)
56,000 loan (30 years at 4.5%) - 280/month
10,000 repairs (I am estimating this as the max I would spend on repairs for the roof)
4,000 closing costs
1,450 yearly taxes
1,000 yearly insurance
24,000 total cash investment
1,400/month rental income (700- per apartment)
485/month (mortage, insurance, taxes)
915/month cash flow
12% COC Return
Ideally I would like to live in one unit with my roommate and rent the other unit out. From what I have calculated with 1,050/month coming in for rent, this should not be a problem. And appears to provide a pretty decent return on my money if I were to rent it out.
Looks good, but as you know in Buffalo, don't underestimate the cost/benefits of location. Do your homework to understand the dynamics of the neighborhood, and demand for rental units in that area. On paper, it looks like a decent deal (nearly the coveted 2x) but you have to factor in location.
Yeah this house is located on the edge of a really trendy neighborhood. And I live about a mile down the street, so I am really confident that it is on a good location.
The one thing that concerns me is how much cash equity I am going to be putting into the house because of the rehab costs. Due to the first time home buyers program I am in the bank will not allow for a 203K loan to cover rehab costs. I am a little worried about emptying my saving out this much and was wondering if anyone has any creative ideas for covering rehab costs? I know typically the bank requires a couple years of cash flow before they are willing to re-finance?
Nice to see some more Buffalo investors. Do you know what the ARV is on this place? If you are living there, why do yo need 20% down? Is it because it needs a new roof? You should be able to get away with a lot less down if owner occupied. Depending on the area, the numbers look good, but I did not see any numbers for maintenance/repairs in there. I know you will be living there, but you should account for those also.
Also you stated 14000 down with 10000 for roof and 4000 for closing, that would be 28000 and not 24000 invested.
Depending on area, it looks like a decent deal for Buffalo.
@Shaun Carl Yeah looks like my math was bad, should be 28,000
I figured that with 915/month cash flow even accounting for 25% of rents going to maintenance that would still leave a cash flow of about 565/month for the whole house.
My mortgage officer lead me to believe that due to me using the first time home buyers club grant, the minimum down would be 20%. I will have to get a hold of him and see if they can take a lower down payment. Thanks!
yeah if you are doing fn first time home buyers and this is your first property which you will live in the an FHA 3.5% down loan would work. Sounds like you are looking at the west side, good luck!
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