Property near A-Class area advice

3 Replies

Hi BP,

I am looking at a property in a A-class area where is close to high way, shopping center, and big companies. I am pretty sure that my tenants are professionals because I drove through the property location. It is under condo association with HOA fee $191, and Community Fee: Cam, Lawn Maintenance, Snow Removal, Trash Removal (not sure how much). The deal is listed as below:

Price: 115k

Sqft: 950

Beds: 3

Bath: 2+1/2

Parking: 2

Rental: $1100/month

Is it a good deal for a A-Class area? If not, what is the price should be? 

Thanks

I would stay away from condos. Lots of posts on this. The HOA fees eat into your profit over time and can go up dramatically.

It seems to me with the HOA, vacancy, property management, insurance, maintenance you will have little room for cashflow.

A good rule of thumb is figure 10% of rent for each of those.

Yes the figure is quite high, but it's better to calculate too much then too little.

Vacancy 110

PM         110

Maint     110

HOA 191

Total not including insurance 

521

1100-521= 579

That leaves very little room to pay insurance and the mortgage.

Now if you are paying all cash then the cashflow will be much higher.

@Huy Ly

I predict a REALLY low price once you run the numbers.

HOA fee AND Community fee? Plus it violates the 1% rule.

Add up:

Monthly Mortgage payment (~460/month)

Taxes (probably high near Class A area)

Sewer and Water (community fee?)

Trash (community fee?)

Heat/Utilities (none, should be covered by the occupant)

HOA (truly evil for investors)

Cap Ex and Ops (at least $100/month for future fixes)

Insurance 

Mgmt Fee (10% as a standard)

Vacancy (Class A you're probably safe at 5%)

And you'll probably come out above the $1100 income tag. I've rarely seen a condo worth buying as a pure investment. The HOA fee generally kills any sort of profit you might have.

You're in Philly?  Go north young man, go north!!  Find SFHs and make your fortune :)

@Aaron Montague.

Ha ha. Thanks for your advice. Go North Philly is always a good idea. I will search around.