I wanted to post the story of a rental house that we purchased a few months ago and just got done with a cash out refinance.  The numbers are great and I think they will give some of you the motivation needed to pull the trigger on a similar property.  

House is a 4/3 in a gated community. It was a HUD foreclosure and the previous model home in a community that is still building new construction homes. The area is dominated by military, health care, and some executive rentals.

The purchase price was $185k and we put just under $5k into the home for closing costs and light renovations (paint, cleaning, gutters, fridge).  Cash purchase all in at $190k.  

We rented the house out immediately on a long term lease at $1775/month with the tenant responsible for all utilities and lawn maintenance.   So, this house was just under the 1% rule which is what I shoot for in my upscale rental properties.  However, the rent will increase 3% per year so we will get there in about 2 years.  

I contacted my online lender after 2 months of purchase and got the cash out process going, the house appraised at $265k and at 70% LTV I was able to pull out $185,500 on my cash out with no origination fee, 4.5% APR, 30 year am, and $1k lender credit at closing.

So, we now have about $5,500 into the house (due to closing costs) and it is cash flowing at just over $300/month once maintenance, capex and vacancies are included.  I currently self manage our properties but that would drop the cash flow in the future when they all get passed over to PM.

I did need the upfront cash and had to find the deal but for a little bit out of pocket we were able to add a great cash flowing property to our inventory.  And, the day after closing we bought another one with the cash!  

The deals are out there, anyone else have a similar story?

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