Under Contract for First Rental Property
Good Morning BP!
Last night I put a property under contract that will be my first rental property. I have experience with flipping and wholesaling properties, but this is a new venture for me. I am looking for advice and potential obstacles to look out for in the process. Anything you can offer is much appreciated!
The property is a 3 bed/1.5 bath townhouse in the Pike Creek area of Wilmington, DE. It is 1750 sq. ft., built in 1978, and will rent for $1,450 a month. It is a Fannie Mae Homepath property that the bank did a lot of work on. They have replaced the roof, installed a new water heater and HVAC system, replaced the carpet, painted the entire interior, replaced the kitchen with new cabinets, counter tops and flooring, as well as rehabbed both bathrooms. After a new refrigerator, washer & dryer, blinds, and few minor repairs the property will be in rent-ready condition. The listed price was $144,900 and my offer of $136,000 all cash was accepted.
My plan is to borrow private money to fund the purchase price and then do a cash-out refinance as soon as possible (within 3-6 months). The property is conservatively worth $185,000 and I was given an unofficial BPO of $200,000. I would look pull out $148,000 (80% of value) on a 30-year fixed rate mortgage through a local bank.
If you see any red flags or something I should be concerned about please let me know. Thank you!