I am in the process of buying my first investment property...signed the contract but have two days to send the earnest money and 8 days for an inspection period. I made that decision right before reading BP podcasts and blogs. Now I am really hesitant to close this deal...
Location: Norcross, GA
Purchase Price: $218k
Using conventional loan - 4.375%, 20% downpayment
market rent $1600-1650
brand new (less than 4 years old) townhome, end unit, in a very favorable location
This community/area has gone up $60k in the last 3 years and I thought there was some room for more growth given the market condition + desirable location. 15 year old houses are trading around the same price in the area, which gave me a little more confidence that this property could gain value in the next few years. My strategy is to exit in 3 years.
Based on my calculations, it will generate 3.7% cash-on-cash return in the first year (with an aggressive expense estimates) - I am betting on the appreciation value than cash flow. But now that I have listened to bunch of BRRRR strategy podcasts and blogs, BRRRR seems a lot less riskier than buying a property and hoping for a "potential" appreciation.
Regardless of buying this property or not, my next deal will be BRRR and already made an investment partner who has a good connection with rehab workers.
Any advice would be very helpful.
I would be looking for CoC of 10% or more. You also need to look at monthly cash flow.
Yes, I met up with an experienced local agent today and decided not to purchase this property. Thanks for the input!