Real Estate Investor · Albuquerque, NM · Member since 2015 · 68 posts · 12 votes
Found a non-mls home, Single family, good neighborhood, maybe a B. Asking is 120k, I'm thinking 10k-15k in repairs (needs a new bathroom, some flooring, paint, kitchen refresh. After repair value of about 170k (based on comps it says 171k, I'm thinking 165k being conservative).
It would rent for about 1200-1300
I can't find anything that hits the 70% rule, nor the 2% rule.
So numbers breakdown:
120k purchase, 3k closing, 10k rehab.
133k in.
Mortgage payment (supposing 130k financed at 4.5%) is 660
Add 175/mo taxes
Add 50/mo insurance
Add 75/mo water
about 1200/mo-1300/mo rent.
that leaves about 325/mo cash flow... Is this a horrible deal? Mediocred deal? Good deal? My goal is a combo of BRRRR/ ~5-10 year hold... I'm having a hard time of figuring this out.
There is probably no cash flow with those numbers once you account for maintenance,vacancies, and property management. However if I am reading this right you will have basically zero cash in the deal. Is your plan to buy for cash, repair than look for financing at the ARV. If you can pull this off with no cash out of pocket after financing you have 40k in equity, a tenant paying the mortgage, and hopefully the prospect of appreciation. That sounds like a winner to me.
There is probably no cash flow with those numbers once you account for maintenance,vacancies, and property management. However if I am reading this right you will have basically zero cash in the deal. Is your plan to buy for cash, repair than look for financing at the ARV. If you can pull this off with no cash out of pocket after financing you have 40k in equity, a tenant paying the mortgage, and hopefully the prospect of appreciation. That sounds like a winner to me.
@Matt Gee, the numbers look best to me if you decide to SELL it straight away for its full ARV after you do the R (but, try to get it for LESS than $120k in the first place)? The ongoing rental seems neither here nor there. And appreciation? Don't bank on that!
IMO wether you are going to wholesale it or flip it, I would offer $95K. They would either accept or counter you with $100K. Then either wholesale it for $105K or rehab and flip it for $174,900 to start driving up the ARV of surrounding houses...once again this is just my opinion. What ever you decide to do with it, you should definitely start by getting that purchase price lower. Hope this helps
I still like this deal but I think the perspective depends a lot on the market you are dealing with. I do not know your market or the neighborhood. While you cannot bank on appreciation anymore than you can bank on a stock going up, I do believe there are markets where you will very likely see appreciation over the next ten years. I'm not talking boom or bust appreciation but rather 3-4% on average. So a deal like yours could see the property worth 220k in 10 years and your mortgage at 100k. Also rents should increase so your rent could easily be north of 1500. The key to a deal like this is getting it done with no cash in. I do not think it is a stretch that you could have 100k of equity after sale costs in 10 years. To grow zero to 100k in ten years is not an easy feat. Repeat several times and you have serious cash.