I am really having trouble deciding if I should move forward on this certain deal and wanted to reach out for some advice and guidance. So I live in Greenville S.C. and I am currently looking at a house in Spartanburg S.C. (about 30 mins away from where I live.) It is a great little house. Brick 2 bed 1 bath about 800 sqf. Pretty decent shape overall. No expensive fixes that we saw and is pretty much rent ready. I had a property manager from the area meet me at the house today to give me his best opinion on the area and what it would rent for. He said its not the best area in the world but not bad at all. He was pretty confident that the house would rent for between 650-700 a month. He also said the house probably wouldn't increase in value very much over the years just because of the area its in. I told him I was paying 32k for the property and he said thats prob about what its worth.
So what do you guys think? Do you ever purchase a property just for the cash flow even tho it might not increase in value? What about the fact that I would be buying it for pretty much what its worth and at the height of the market around here? Any help would be greatly appreciated. Thanks!
What area of town is it in?
I would say you need to think about what the future "play" is for the property. Is it a long term buy and hold or are you planning to cash it out at some point?
Cash flow play is a lot better than banking on appreciation. Your most important aspect of the deal is the tenant. I would post ads on craigslist for the property to see what type of response you get. SCREEN SCREEN SCREEN your tenant. Good luck!
I’m a data freak....
— Got a realtor who “knows” or has access to the current market for the area?
— Maybe check Rentometer.com see if they have any info.
— Go to Craigslist for similar rental properties in the area, and then call the owner for their take.
— Maybe City-Data.com can give you insights to the categories of tenants you may expect.
Thanks for all the responses! a lot of good stuff to think about and to check out. I have until 5:00pm tomorrow to either keep the deal or back out so Ill let you guys know what I decide. Thanks again guys!
Howdy @Casey Wickline
For me it comes down to this. If you are purchasing the property for a long term Buy and Hold, then, Cash Flow is the primary goal. Appreciation is icing on the cake. As mentioned, getting good tenants is important to maintaining the cash flow.
What about this plan....buy the house for 32k, get a tenant in place for around 700 a month. Refinance it for 70% of the value. So hopefully get about 22k of my cash back out of it and just have about 10k cash left in the property and just try to hold on to it long term? So after everything clear like 300$ cash flow a month? You guys think thats worth it?