Help me with a reality check on an existing property.

6 Replies

I've acquired a few properties in Cleveland in the past year, and at this point i am starting to worry that maybe i am pushing too hard or doing something dumb. So, i am not exactly in the $30k category that Ben Leybovich described in his post, but i am close.

I would appreciate an advice and analysis of my first deal: 

So i bought a SFH 1,200+ sq/f in the Kamms corner area of Cleveland.

Purchase price: $43,000 (cash)

Closing costs: ~$2500

Rehab: $15,000

Rent: $1250 a month.

Prop management: 10%

Cap Ex. 10% (at this point it's assumed, i have not yet had to do anything)

Insurance: $50/month

Taxes: $200/month

After a 6 moths holding period I cash out refinanced the house and pulled $53,000 of equity.

At this point i have about 7-8k of my cash in the house. 

Mortgage payment(including taxes and insurance) are $520 a month.

What do you guys think?

My other homes look more or less the same.

Thank you!

Forgot to mention a 10% vacancy rate that i assume.

Hey there?

What exactly are you worried about? It looks like a solid investment in my eyes. Hold onto the property for a few years, then swap it out with a 1031 exchange for a "better" property. It's a long road ahead. Continue to prosper my friend.

Hey there,

What exactly are you worried about? It looks like a solid investment in my eyes. Hold onto the property for a few years, then swap it out with a 1031 exchange for a "better" property. It's a long road ahead. Continue to prosper my friend.

kamms corner is a very desirable area. You were also able to retrieve most of your cash back and let the tenants pay off your mortgage. That's a great property for you.

i don't see any issues with it. looks like you are on the right path. keep going. 

Awesome, appreciate the reassurance guys! As i said, the numbers look good, but because i've only been exposed to the Cleveland market for a year i felt like i could use an advice from experienced investors.

By the way - this is the article that i was referring to, and what made me worry about my investment strategy: http://www.biggerpockets.com/renewsblog/2014/02/25...

And to be honest, i can kind of relate to it. One of my properties is a perfect match to a $30k property that Ben (in the above post) describes. It is still in a somewhat decent area of west Cleveland but only commands $900 in rent. With property taxes, insurance and maintenance being about the same as the other homes - i can barely see anything left. Plus, coincidentally or not, but this is the property that i had my first evection with- on the third month of lease :) Additionally i am still not able to refi it, due to low mortgage amount. I still want to try and make this house work, but seems that anything below $1000k a month in rent is going to be trickier to cash-flow. Of course this is for a SFH. Not yet sure if economies of scale work different for apartment buildings.

What has been your experience, guys?

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