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Would you buy this deal? This will be my first out of state deal and I want to get it right.
The good - solid, low-maintenance tenants currently occupy the property. I won't have to do any turnover for a little while.
The bad - they're paying way below market rent, probably $150. Rent here should be $800+ for a 3 bed in this neighborhood.
I believe I can raise the rent to market over the next couple years. If the tenants leave, I'll do cosmetic updates for < $10k to get the rent to $800+.
Has anyone here successfully kept good tenants while bringing up the rents to market?
Los Angeles, CA · Member since 2017 · 20 posts · 7 votes
7y
@Account Closed I can get a low interest rate through my credit union. Not super concerned about that though, I can go up to 6%. The loan is going to be so small the impact to the monthly won't be much.
The building itself looks to be in great shape so I've got expenses fairly low. Doesn't need updates any time soon. I'll put $10k cash aside and access to much more through my HELOC if necessary. Part of the reason I have maintenance and CapEx so low is because the current tenants are low maintenance. Sure, this could change when they leave, but as soon as they leave the rent will increase drastically and give me alot more cushion.
If I can bump rent to $700 after their current lease is up my COCR is 12%.