First buy & hold = Condo in A+ Loc? Help me analyze this deal

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First buy & hold = Condo in A+ Loc? Help me analyze this deal

Cory Benhardt
Rental Property Investor · Philadelphia Suburbs · Member since 2019 · 46 posts · 11 votes

Non warrantable condo due to commercial/residential ratio. I can get financing at a local bank under the following terms:

$235k purchase price 

10,1 ARM 30 year amortized

20% Down

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*This link comes directly from our calculators, based on information input by the member who posted.

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  • Aaron Montague
    Rental Property Investor · Brookline, MA · Member since 2013 · 1k+ posts · 777 votes
    5y

    @Cory Benhardt

    Where did you get $20/month for management?  Professional management companies are going to want 8-10% of collected rents.  If you plan on self managing I recommend that you budget 10% so your accounting gets used to seeing that money go out the door each month.  If you don't do this, you lock yourself into self managing the property or being forced to sell if you want to move.

    Everything else looks good.  You might even get a slightly lower rate than that if you shop around a bit.

    Happy buying!

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  • Cory Benhardt
    OP
    Rental Property Investor · Philadelphia Suburbs · Member since 2019 · 46 posts · 11 votes
    5y

    @Aaron Montague How much is "enough" for a condo association to keep in liquid capital? I live 3 blocks away from the property so I plan on managing myself

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  • Aaron Montague
    Rental Property Investor · Brookline, MA · Member since 2013 · 1k+ posts · 777 votes
    5y

    @Cory Benhardt

    If your HOA has specific requirements for capital reserves, it should be spelled out in your contract. The money you are putting aside from "repairs" and "cap ex" should cover any reserve accounts.

    The other big item you want to check is the financial health of the HOA. Your fee seems low to me, though I know nothing about the complex. Any money you are making could be wiped away if this is the type of HOA that using bonds or special assessments to redo everything and anything. You have some room in your monthly numbers but a 3 year, $350/month special assessment will kill your ROI. If the HOA is in good financial health this shouldn't be an issue.

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