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Hello BiggerPockets Community,
Looking at this property to purchase as my main residence for 2-5 years before becoming a landlord. I thought I should run a Rental Analysis since that will be the end goal. Although a lot of the "tests" it might not pass. The neighborhood is great and living here would allow me to save a ton of money. Although it might not be a lot of cash flow. Im getting a place to live and a option to rent in the future thats positive cashflow.
I have saved up 35k to put down. The other home that I own is not sold yet. (Nor listed currently) I thought about doing a recast loan allowing me time to sell and come up with the extra money. Worst case scenario if it doesn't sell I would be able to come up with the needed cash in 2 months I'm just not wanting to cut into those reserves, what are my best loan options?
Thank you for your time,
Newbie Evan Griffin
@Evan Griffin this is not a rental property. Your putting in numbers to get it to supposedly to cash flow. Have you looked at your own report for the 50% rule for cash flow. Showing -$222 a month. Vacancy your place will only be vacant 1 month out of 8 years. not likely. Repairs @ $32 per month. One service call per year will eat that up. Capex : roof $10000 / 25 life /12 months = $33 per month. This house will need the roof replaced in 20 years so $41 per month. Flooring in a rental will need to replaced in 5-8 years. 1500 sf @ $6 sf = $9000 /8/12= $94 per month. Hvac,hot water heater, gutters,appliances,minor kitchen remodel, etc will be needed in your capex. Two items in capex are at $127 per month. I use 8 % vacancy, 15% for repairs and capex. I see no property management.
@Tim Herman I know my area and this neighborhood so no I don’t think I will have a problem renting it.
Average rent in that area is 1,614$. A new roof! A house this small? 2,000$ in supplies in house job. I’m not making numbers up just for fun.. I could higher expenses to be more realistic. Sure. But This house allows me to save 800$ a month personally. So with money saved, a cheap payment, and the main purpose of this house to live in. Save. Payoff what little debt I have and possibly rent out. Sounds realistic to me. But who knows.. I’ll run more reports with higher numbers and expect the worst for the property.
@Evan Griffin you wanted thoughts as this for a buy and hold. Most people underestimate their recurring cost. You can download a spreadsheet that @ sam tato created in the file section titled: cap ex that will show you what you need to budget each month. Take my advice or not, no skin off my back.