Run your numbers for doing an all cash deal and if you are not getting a pure 10% return on YOUR money I would as an investor RUN in the other direction.
Example: You have 82k to invest so you buy this little money pit. Now at 10% return annually is $684.00 monthly that you have to clear to make it worth your while. You stated a monthly rent of 1500 which sounds great so lets take our return of $684.00 out which leaves $816.00 you state expenses of whatever it was like 932 maybe (too lazy to go back and look) anyway you are in the hole and NO I would not purchase this and shuffle dollars back and forth just wasting energy stirring up dust. You need to purchase this property at a large discount to make this work man. I will let you do the math but 70% ARV sounds like a good number. That would be about 58k purchase price which appears to make your numbers work now. As most everyone here knows there are also tax writeoffs like depreciation that put the icing on the cake that is why 10% is acceptable (at least to me)
NEVER PAY RETAIL...................... Good Luck on your deal.
I agree with John Thedford 100% that your deal is made on the buy and if you are paying full retail, you are not getting a deal or allowing yourself enough room when the market changes, and like he said "it will"
Hello Robert, you've asked for an opinion and like a navel everybody has one. First, there is quite a bit of basic info not available for people to look at, review and respond to such as is this a SFH? The rent seems high rent for a sub $100k investment? Utilities, if included costs could skyrocket because they are free (don't even ask about the guy who left his door open while he worked in the yard in Phoenix at over 100 degrees). If utilities are not included (extra cost), be really careful to compare like-cost properties i.e. is that really market rent? However at the end of the day, I am in line behind John Thereford. You make your money when you buy. Personally, I want to walk in with 8 to 10% immediate equity. However, no one thing makes it a good deal or a bad deal. Good luck Robert.
Hi Everyone!! Wow, Fantastic response and comments. Like some you who have suggested that I not invest in this deal. Well, I decided not to invest! Not enough cash flow and the subdivision is not the best in town. There are many other opportunities in Houston to consider. Thanks again for everyone’s participation in this Forum. Your time and comments are very much appreciated!
This was a crazy post. Half the people thought the rent was too high, the rest thought rent was too low. Lol.
Even though you decided against it, a couple thoughts for future. Compared to where I invest:
-Your expenses seem extremely high (60% if I'm reading that right?)
-Your rent seems high - 1.8% to me means the middle of the ghetto, though this would explain the high expenses
-Unlike others, I actually think your closing costs are extremely low. $3k for any realtors involved (unless they're not but you didn't state this) + all loan costs other than points + any property taxes / filing fees / etc... I've never seen that.
Hi Everyone!! Wow, Fantastic response and comments. Like some you who have suggested that I not invest in this deal. Well, I decided not to invest! Not enough cash flow and the subdivision is not the best in town. There are many other opportunities in Houston to consider. Thanks again for everyone’s participation in this Forum. Your time and comments are very much appreciated!
Same thing happened to me when I came here with a condo deal. The mistake would have been not asking. Good luck on the next one.
Hi Kevin, Thanks for you comments! The numbers were not that good to begin with, so I decided to throw it to the BP community for comment. I was really amazed to see the responses. I have a couple of more properties to analyze, so it be fun and educational to post one or two of those. Thanks again!