REO- Is this one a good deal? Please assist!

[Dakoda Spencer]

Hello BP family!

I'm looking at an REO and I really would like to have a second opinion on it as a SFR rental. Also worth noting, I will be living in this as my primary residence for at least a year. I will be walking through the house tomorrow, so I don't know all of the conditions on the inside. Here are the numbers:

• Asking: 35.5K
• ARV: 50K (I know, not a good neighborhood for appreciation)
• Average Rent: 650/month (also a small 1 car shed that could bring in more income)
• Old Victorian style house, build in the early 1900's
• Rehab Estimate: 5K - Has some work already done to it, but will need some siding, paint, etc...(I will be doing this myself, since it will be my primary residence and I don't have the cash available to me right now)
• I put in $600/year for taxes, which I looked up.
• I'm using 10% for Cap Ex, Vacancy, Repairs, and Property Management.
• Putting in about $75/month for insurance (which should be a little high, I will call about this tomorrow)
• Using 20% down traditional loan from a local bank with an estimated 5% interest
• The Rental calculator here on BP said I would be cash flowing about $112/month, and would get about a 9.58% COC ROI. I think this would be the worse case scenario for this property. Of course, after I walk the property tomorrow, I will have a better idea of the rehab costs, rent and appraisal potential.
• Here's the link to the analysis I did here on BP.

I'm trying to over estimate on my expenses and underestimate on my profits. Again, this will be my primary residence for at least a year before I rent it out. In that time I will be getting it "tenant proof" as much as I can. I would normally want some more cash flow and better ROI, but I'm really in need of a primary residence and thought this would be decent purchase. All constructive criticism is welcome! 

-Dakoda Spencer

[John Leavelle]

Howdy @Dakoda Spencer

Here's my two cents. Early 1900s home! You definitely need to have it inspected. Make sure all required upgrades (plumbing, electrical, lead paint, etc.) have been completed. Old home also means higher CapEx planning.

Not to change your chosen investment strategy, but, have you considered  doing a house hack in a Multi-Family (2 - 4 unit).  With a  5% down payment you could get into a more valuable property with the same $$ amount you are using for this property.  Live there for one year while collecting rent from other units.  Also might be easier to get loan from banks.

Hope this helps.  :)