Newbie Needs Deal Analysis Help

3 Replies

Hi all,

I would like to get into property ownership and have a potential deal that I'd like some feedback on.

Property is SFH that is occupied and renting at $650 / month

Owner is asking $35K.

Taxes are $800 / yr and insurance would be about $500 / yr.

I'm told that the roof was replaced about 12 years ago.

The seller might be willing to take a second for downpayment if I purchased at full price.

Does this sound like a reasonable deal or would you keep looking?

Any feedback / thoughts appreciated.

Dave

Dave,

I would look into finding an consulting with an experienced local agent. Hire the agent to do you a Broker Price Opinion(BPO). Instead of paying for an appraisal that will run you a couple of hundred dollars a BPO can run you $30-60. Another term is comparables. Some agents may do it for you for free. Don't rely on Zillows(ever). Then ask the agent for a rental comps as well. This will give a birdseye view of what the rents that are going for based on apple to apples in the immediate area. Run the info on hand through an ROI calculator , then use your better judgement to make a better informed decision. On the surface it sounds good but you would want to protect your self at all points. Do a home inspection, get a title report and make the sale contingent and subject to. Good luck.

Carlos - great information.  That was the first I'd heard of a BPO.  I would have ended up hiring an appraiser and overspent for the information; thanks for the advice.  I'll also need to get a professional's take on the local rents - I was told by the agent what the current rent is, but I need an outside source to validate that the amount claimed is accurate / possible if I were to close.

Thanks again for your help.

Dave

General tip: never believe the sellers' info on what the rent is. :)

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