Should I move forward?

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Hello. I'm gunning to purchase my first investment property. While I was looking at more traditional three or four bedroom SFHs, I came across a FSBO 1 bed/1 bath 450 square foot home, built around 1950, being offered for $45,000. Even at $45,000 I think its a bit under market value, but I would hope to be able to get the seller down to $35,000 - $40,000. The house was renovated a bit in 2012 (nothing too fancy), including a new roof, has window unit a/c, gas heat, and includes lake rights to a chain of lakes (although its not right on the water). One of my bigger concerns is that it is on well and septic -- my concern is more that I've never dealt with that before -- but the owner said he installed a brand new septic system last year at considerable cost -- and, of course, I'd have both systems inspected as a condition of sale. The house is currently rented at $650/month. My thought it is paying for the house in all cash, enjoying the cash flow, and then, since I will have no mortgage, taking out a line of credit on the house to leverage into another rental property. Doing that, instead of putting down $30,000 - $40,000 on a more traditional $125,000 +/- home or duplex, would, I think allow me to acquire two properties a lot faster.... plus, again, the added bonus of the cash flow on the first property. But... I'm a little nervous about a 1/1 home and septic/well -- I understand that selling, when I choose to, might take a little longer, but, at this point, I think I would just hang on to it as a rental and milk it for the cash flow. Does this make sense as a strategy to others? Or would you abandon the idea and just focus on something more traditional and with public water/sewer? Thank you very much in advance!

Originally posted by @Howard Handler :

Hello. I'm gunning to purchase my first investment property. While I was looking at more traditional three or four bedroom SFHs, I came across a FSBO 1 bed/1 bath 450 square foot home, built around 1950, being offered for $45,000. Even at $45,000 I think its a bit under market value, but I would hope to be able to get the seller down to $35,000 - $40,000. The house was renovated a bit in 2012 (nothing too fancy), including a new roof, has window unit a/c, gas heat, and includes lake rights to a chain of lakes (although its not right on the water). One of my bigger concerns is that it is on well and septic -- my concern is more that I've never dealt with that before -- but the owner said he installed a brand new septic system last year at considerable cost -- and, of course, I'd have both systems inspected as a condition of sale. The house is currently rented at $650/month. My thought it is paying for the house in all cash, enjoying the cash flow, and then, since I will have no mortgage, taking out a line of credit on the house to leverage into another rental property. Doing that, instead of putting down $30,000 - $40,000 on a more traditional $125,000 +/- home or duplex, would, I think allow me to acquire two properties a lot faster.... plus, again, the added bonus of the cash flow on the first property. But... I'm a little nervous about a 1/1 home and septic/well -- I understand that selling, when I choose to, might take a little longer, but, at this point, I think I would just hang on to it as a rental and milk it for the cash flow. Does this make sense as a strategy to others? Or would you abandon the idea and just focus on something more traditional and with public water/sewer? Thank you very much in advance!

 I might go for it. Someone who would rent a 1/1 on septic is likely a long term renter. They have set their eyes only "so high" and they are happy with that. I'd put a long term, younger tenant in that has the possibility of buying the house from me sometime in the future when I choose to sell. It would be a win/win.

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