I am looking at my potential first deal outside of Bend, OR. Below are the details:
- Single family home, 3 bedroom 2 bath
- 1464 square feet
- $310,000 asking price
- built in 2003
- 20% down with an est. mortgage of $1,347
The home is in great conditions and won't need any major repairs. My estimated monthly expenses (mortgage, taxes, insurance, PM fees, potential maintenance costs) comes to $2,040. This also doesn't take into account how long it will take to find a long term renter, I have been told by numerous PM that the demand is there and rental vacancy is less than 1%.
I am looking to use this home for long-term rental and have found that the average monthly rate is between $1,500-$1,800 / month. In my calculations below I used $1,800/ month for rent.
Crunching all these numbers it looks like I won't be breaking even at the end of the year and when I threw these numbers in BP's calculator, I wouldn't start making a profit until year 5.
Is this concerning? a bad deal? Am I missing anything here?
Based on the market, it seems impossible to get close to the 1% or 2% rule.
I have been told that the market looks like it is going to appreciate a lot since a lot of people are getting pushed out of Bend because of the high cost of homes and rentals.
Would love any advice! Thank you in advance!
Is there a reason you like this property specifically? In terms of cashflow, it doesn't look to be a home run.
How about something like this? A tad bit pricier but you get three units instead of one. Depending on your situation, you could live in a unit finance via FHA w/ 3.5% down and bank the other two units.
Great first analysis tho. Happy investing!
Congratulations Jenna for crunching your first deal so well! Most markets have realized a huge gain over the last few years so there is less appreciation coming. Jenna I am glad you noticed this potential investment does not make any money. Ans should you have a couple of bad months or an unanticipated expense you will be unhappy. Regardless of the market these investments have to pay for themselves with rent coming in to cover all expenses, build up reserves and give you a profit. You will find them!
Your deaL is no deal . Walk away