Hello everyone! Im going over a few deals this week. Still looking for that first purchase. I recently came across a property thats very interesting.
It is a duplex with 1 tenant, who has lived there for 15 years. And is paying approx $1600 a month in rent. And pay all of his own utilities. There is no HOA and its within an hour of a military base.
I will be using a VA loan with no money down. And the asking price is $240,000.
With what information i have gathered so far (waiting on agent to respond) and using the calculators here on BP. It would cash flow a negative amount of roughly $100 per month.
To me this seems like a no brainer. I buy and hold as intended. And after a year of owning it i qould be able to rent out the second unit. Therefore increasing the cash flow.
I know this is a rough estimate as more information is needed. But could i ask for advice, suggestions, questions i should ask or concerns i should have from all of the much more advanced members of the forum?
If you can get the duplex under contract, it's a great purchase. All you'd have to do to build a comfortable income is buy one duplex every year for five years that repeated the soundness of the one you're considering now and you'd have a monthly cash flow of $6,000 with a robust savings for repair and maintenance.
You'd also have somewhere in the neighborhood of a half-million-dollar net worth, and all this without considering other sources of income like a W-2 or working spouse. Best of luck!
Sounds like a great purchase, as long as its a home you will be happy living in (or at least can tolerate living in while you fulfill the VA residency requirement). Best of luck!
@James M Fario make sure to include a stipulation in the offer asking for the rent ledger and lease to be provided during due diligence. The rent ledger will permit you to verfiy if the tenant has been paying or not. It would be a shame to close on the property and find out the tenant hasn't been paying the last few months. If the tenant has indeed been there for 15 years, then usually it's a good indication he's been paying on time, nevertheless still include the stipulation. Also be mindful of the market, most properties are still selling well over list price, but obviously that depends on your specific market. Everything you have discussed makes this seem like a great deal. Best of luck!
@James M Fario Sounds like a great first deal! House hacking with your VA loan is such a powerful strategy. I would get more info about the tenant, what market rent is for one side (so you know if you need to start raising rent), and what screening was used for that tenant. If he/she has been there for 15 years they probably love living there and are good tenants, but you just want to make sure.
Keep us updated and good luck!
a no money down deal sounds like a win!
I would consider putting SOME money down if you've got savings
Doing this would improve your DTI for future purposes and improve your cash flow and equity performance.