Hello BP Community, 

Currently I am looking at property on Homepath via the First Look program that is listed for ~260k - I'm hoping that my offer for roughly ~210k will be good enough to be accepted. I'm going for the buy and hold strategy. I read and reread a lot of the analysis weblogs/forum posts and ran the calculators, but being as this is my first purchase I am not wholly confident if I'm running the numbers correctly. Please help!

That being said, here are the numbers:

 Purchase Price (Hopefully) - $210k-220k
Downpayment: 15%
Financing: FHA 203K (Conservatively $60k in reno) - 30 Years
Interest: 4.25%
Property Taxes: $10,290
Units: 3
Average Rent Per Unit: $1200-1300 (I'm willing to bite the bullet for the first year and dip into my pocket and rent out the third unit afterwards) 

The other question I had was that if (big if)  I'm running the numbers even SEMI-correctly, it looks like the numbers are well worth it. In case my offer gets rejected, whats the highest I should offer for the property so that it's still "worth" it? 

Thank you!!

It looks pretty good according to the 50% and 1% guidelines.  

However you should run the numbers in more detail.  The property taxes are 25% of your expected rents, so that will likely push your expenses above the typical 50% level.

@James Nam

I'd pay $208500 for the place.  This analysis starts with month 13.  The first one you move out and rent the room.  The nice part about the first year is that you'll only pay about $700 out of pocket to own the place.

Here's why:

Mortgage Rate 4.25%

Length of Mortgage in years 30

Monthly Mortgage payment $1,122.73 (total loan 268,500)

Taxes $857.50

Sewer and Water $100.00

Trash $75.00

Heat/Utilities $50.00

HOA/Legal $41.67

Cap Ex and Ops $175.00

Insurance $200.00

Mgmt Fee $390.00

Vacancy $315.90

Total Expenses $3,327.80

Total Revenue $3,900.00

Cashflow/month $572.20

Cashflow/year $6,866.44

Cash on Cash Return 15.00%

Unlikely you'll get much of a discount on the asking price when the property is just listed.

Thanks everybody for your responses -- good to know I wasn't completely crazy.

@John D. Most likely I won't be getting that steep of a discount, but just because its a First Look offer I'm hoping that there will be some leeway to wiggle on up. I'm most likely going to submit an offer at 80% of listing price.

If it doesn't work out... one of the first things I heard that I took to heart in BP was "Don't fall in love with a deal" hahaha

Thanks again!