This property is interesting. From the pictures on MLS, there is extensive work that needs to be done. It's has a roof leak and subsequent damage to the interior. It also has additional damage to the garage door and needs a new fence. I have not walked the property, so I assumed a rehab budget of $70,000. This could be woefully low, or terribly high. I also set the purchase price at the seller's asking price, which may be able to be negotiated lower.
The cash on cash return is not high. But, depending on the actual repair costs, there may be a good chunk of equity to be gained. Regardless, it is located in a desirable area that is appreciating quickly. (My analysis likely does not reflect the appreciation potential. I only used a figure of 3% appreciation.) If I had my funding ready, I would try to inspect the property tomorrow.
What do you guys think? FYI- I plan to purchase my first rental with cash, then take a year or two to build credit and a down-payment for my next rental. I currently have no credit, good or bad. I know leverage can be powerfully good, but it can also be powerfully bad. So, I plan to take it slow.
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