First Deal!!! -- Two town houses outside a military base?

4 Replies

I've been searching for months now for a decent buy-and-hold deal near my location of Ft Rucker, AL. Through the MLS I found a guy who owns two adjacent town homes just a few miles outside the gate. He's asking a higher price, but if I purchase both that'll give me better negotiating power and they should go for the mid to low $50k's. They need almost no work to be rent ready. Below are the numbers for just one home (they are identical) that I ran through the bigger pockets rental calculator. I'll be using a local bank who will hold the mortgage in-house. I'd like to know what you guys think! Thanks in advance for the help!

Purchase price - $55,000

Down payment - 15%

Interest rate - 5.5%

Annual property taxes - $762

20 year amortization

HOA fee - $45/mo

Insurance - $67/mo

Vacancy - 10% Repairs/Maintenance - 5% Capex - 5% Management - 10%

Monthly rent - $750 (other similar properties are currently rented for $800) 

======== Montly cashflow = $27.91

Notes: I'll be doing the property management but factored it in anyways. Repairs and Capex I estimated on the low end because the properties are less than ten years old. Vacancy estimated at 10% because I'm going to be SUPER picky with tenants. Properties are individually metered and tenants will pay utilities.

Very low cashflow, but it's the best I've seen in my area.  Please let me know what you think.  Any and all comments welcome.  Thank you!

-Ryan

Those cash flow numbers don't look very good but it may be the standard for your area? Are these homes in a place where you would expect to see some appreciation?

I wouldn't expect any rapid appreciation but the area is definitely slowly on the rise.  There's new construction nearby and the Army base isn't going anywhere.  I didn't factor that into my numbers just to err on the conservative side.  And I had the same thought as you about the cash flow. but it's the best I've seen to date after looking through dozens of properties.  Would you agree with most of the numbers I used in the calculator?  Thanks!

@Alexander Felice , good point, unfortunately since I'll be going through a local bank they historically won't do any more than 20 year to keep in in-house.  On the conventional side they require 25% down payment and that would hurt my wallet.