Investor, Property Manager · Louisville, KY · Member since 2013 · 42 posts · 1 vote
a couple of months ago I sent what I thought was a deal to Brandon turner. turns out it wasn't at all and he let me know (I was crushed). so i've searched high and low and found this one! What does everyone think?
$52,500 my payment is 375.00 - 30 year. (T&I included) down payment 11,000
If further research such as inspections, etc go well, this would be one that looks very interesting. It would appear you will cash flow close to $200.00 using the 50 percent rule at a quick glance. I'm a bit surprised it needs no repairs. The first place we got was in amazing condition, and we still found things we wanted to do to improve it.
Can you give some more info on it? Where did you find it (MLS?), what kind of neighborhood is it in, what year is the house (and did an inspector confirm it doesn't need work?), and where did you get the $900 number from?
its part of an estate sale between 3 daughters whose Mom just passed away. She was a realtor and kept the home in very good condition. it was listed for 75K but we have been battling w/counter offers
Location is in a mostly blue collar area. Not bad at all. I would rate the neighborhood as B- Most of the people that live there are older 55+
Regarding inspections, I have not had it inspected yet but I am actually training to be an inspector and I tested all outlets and plumbing and foundation stuff. I have a pretty good eye so I doubt there's nothing huge that I missed. it could use some updating that's about it.
I got the rental number from www.rentometer.com it just shows what houses around you with the same criteria are renting for. the average rent for this home is 955.00 but I try to be conservative and use 900.
to be conservative I will just say it needs 2000.00 in repairs but I doubt it.
Haha so true. I have been looking for a property for 6 months to find the best one. None of them were as good deals than this. inspections are very important I am not disregarding that, I plan on getting one. I have all the inspection tools and went through the house with a fine comb and to me I found nothing major. I will put down on the forum if he finds anything.
Hey @Michael S. , from the numbers you posted and decent neighborhood you stated, this property sounds like a good deal. Keep us updated on your progress and maybe we can continue to help. Congrats.
I have been doing this since the 1960s. At the risk of once again raining on your parade, I see problems with the numbers and the property.
To share a lesson learned, my first rental was an excellent brick home in perfect condition. Nothing appeared wrong to the naked eye.
Then, by chance I noticed the drain in the tub drained slowly. It turned out tree roots had invaded the sewer line. Several thousands of dollars later the problem was fixed.
My house was of similar age.
You may not want to guess on the condition of the house or even consider a purchase price until you have conducted a thorough inspection of the property - inside and out.
It is my rule to thoroughly understand the target market before attempting to determine the rental price. Personally, I do not trust my investment success to the accuracy of information found on the Internet. There are too many chances for errors. If you have ever used a GPS or looked up an address online, how many times has the location been incorrect?
Of note: How many families that desire 4 bedrooms will settle for 1 bathroom, especially at $900 per month? 1,000 square feet might be less attractive for a family seeking 4 bedrooms. What I am trying to point out, look beyond the numbers. This may be a property that can become very difficult to rent. Your turn over may be high as well because the cramped family found a larger property.
its funny you mention that because the sewer line was invaded by tree roots but was repaired years ago. my personal house had the same issue too.
there is a clause in the offer concerning if home inspection turns out ok. I really appreciate the information though. I am extremely new to this and I read every article the BP blog puts out. I love being on the negative/realistic side of investing because it keeps you from getting burnt.
even renting out at 800 it still wouldn't be a terrible deal. to get an idea for average/median/high rent www.rentometer.com is pretty accurate. I checked craigslist, trulia, Zillow, and realtor for similar rentals. all around 900.
the fact is I have a lot of knowledge by reading books and blogs but I have no experience in any of this. I would never jeopardize my family for this. to get experience I figure I just have to "do it' you know? my yearly income is 50k and my only debt is my home which my payment is 540 a month. the payment for this house with mine is going to be 915 a month. so I could handle it on my own if its unoccupied for awhile.
I wish I had such a good first rental. Your on the right track. I think this deal will be a good one. Worst case scenario, if it can't rent at all for some unknown reason, it sounds like you have some built in equity. Keep up the good work.
Why do you say it needs updating? For a rental house in that part of town, this looks to be in excellent shape. It's certainly not a 7 figure home next to Cherokee Park, but somebody renting a 4BR for $900/month isn't expecting that.
In the pictures you provided I don't see anything that I would "update" for that particular house/area. I'd suggest getting on www.padmapper.com and seeing if you can find pictures of similar rentals within a few blocks. I doubt you will find anything significantly "newer" looking than this place.
Just my .02 on the photos, again - I'm not super familiar with that part of town, but I have a general idea of what you can expect.
so you think that this home is ok the way it is? the kitchen is nice just really old looking, don't have pic of it. I don't want to put a bunch of money in it. the only thing is that it smells like moth balls and old people.
I'd say go with it. If the numbers are good. I didn't see any numbers for maintenance/management. Although 900 is in the top range for Shively depending on where exactly. But it looks rent ready!! Put a sign out 4 bedroom 4 rent and see who calls. If you get a bunch of calls then get it under contract. It looks like it will cash flow nicely. Pull the trigger!!