Am I greedy?

7 Replies

I am looking at an opportunity:

Single Family, Ask price $44,900 (projected purchase price of $40,000)

Taxes, $1,400

Rent $867/month (rented with long term tenant)

Assumptions:

5% vacancy

10% maintenance

5% reserve

Oh this would also be 100% financed long term with a private mortgage at 4.5%

My analyzing spread sheet conservatively shows a cash flow of $4,100/year or $344/month.

I really am not sure I want to putt the trigger on this one....

My first deal (duplex) is projected to cash flow at almost 6K/year and I really didn't want to look at anything under 5k.

I am new to this, but am I crazy?  I think if I wait it out I can find a better deal....

Appears good if you are right, any time you can acquire a property that doesn't eat any hay isn't a liability, has a cash flow that pays for your time to mess with it, gives you a tax advantage, it's a good deal!

My concern, being your first deal, getting 100% seller financing makes me wonder if the seller knows something you don't, eliminating his ownership headaches for your money. Is the property worth the price without looking at it from the income approach? If not, you can be overpaying for what it is. Good luck :)

We'll to me it seems like you're not looking to purchase a property with instant equity. You're more concerned with whether or not it cash flows. If you've run your numbers over and over keep coming out a $ amount that you're comfortable with I don't see why it wouldn't be a good deal. 

My biggest concern wouldn't be whether or not it cashflows but rather all the other factors like the age of the roof, foundation. The kind of stuff a property inspection report will tell you...

Since this is seller financing, ideally you'll want to be sure the owner owns it free and clear. There are ways around this but they seem too complicated for my taste.

This would be my second deal with the same owner.  The owners husband has passed away and she wasn't involved with the business and doesn't want to be.

Property is being sold at a discount for quick sale.  

If your numbers are correct then it seems like a good deal to me. I would definitely do an inspection to ensure you don't have any surprises that could potentially ruin your good deal like others stated.

You get to acquire a money making asset with no money down.

This is a no brainer.

With no cash out of pocket it looks like a good deal, just make sure it's on par with the comps in the area so you have an exit strategy.  Even if it's cash flowing if similar properties are going for less if you need to sell you will be in trouble.  

Did you include insurance in your numbers? I didn't see that mentioned.

Yes i didnt detail everything but my analysis sheet has insurance included.

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