Good Deal/Not so good deal?

Question

I have what I think is a great opportunity in a fantastic established neighborhood to purchase  a home and I already have three people who would  move in as soon as I say it's ready to rent it for about 2100-2200.  Listed for 250K, but needs about 40K worth of work, maybe less to start with and could Reno the rest later if my exit strategy was to sell.  ARV about 340K.  I want to be a cash offer of 235-240K as I think it'll go super fast.  Would need some private or hard money until I pulled equity out of two other paid off rental properties.  I am not sure I did the calculator correctly and pre-refinance cash on cash is about 5-6%.  I cannot decide to pull the rip cord???????  13572 Walnut Street, Omaha, NE

Melissa Nash · Answer

Sound amazing and hits many of the quick math techniques for me. Follow your gut now and take action!

Ryan Muska · Answer

Wow that home has great bones. Lots of potential for cosmetics there.

Is it electric heat? Are you accounting for capital expenditures? Is it in tornado alley (insurance may skyrocket)?  What insurance premium are you accounting for? Are you having a Property Manager? Have you rented a property out before? Are you planning on making tenant pay utilities? What would you reno if you were to do the reno immediately?

I think it looks pretty good. But I'd like to see your answer to these questions.

Rachel K Reiman · Answer

I did. Sucked it up went for it. I lost it to I’m sure someone who will flip it so they must have paid full price 🤷‍♀️

Rachel K Reiman · Answer

Yes as an investor must leave it off the offer or lose out on the deal. My husband is a contractor and a certified inspector so he is pretty good at identifying any issue. I was mainly using that to give me an opportunity to secure alternative financing or cash besides my HELOC, but I removed the clause and still didn’t get the deal. On to the next!

Edward Dean · Answer

Is the Nebraska market that hot that people are still submitting no contingency offers? Trust your real estate agent but generally not having an inspection contingency clause (what I assume you mean by "no walk away clause") is a risk that is usually unnecessary. Get a good property inspector in there if you do lock that one down with an eye on that basement/sub grade area of the home.

Best of luck!

Matt Morgan · Answer

Let me know how it goes.

Rachel K Reiman · Answer

Thank you. I’m nervous but my personality is to go for it so I submitted with no walk away clause yikes. 🤷‍♀️

Rachel K Reiman · Answer

Ok I’m sorry. I thought I plugged those into the BiggerPockets Calculator. Deposit 40k carrying 200k Loan first with private money I hope or yard money and then refinancing at around 7 percent depending on rates. My plan is to get a HELOC on another rental I have already paid off and pay off this higher rate loan. I gave NEVER pursued “other people’s money” before so new ground for me. Initial cash flow is 150 a month after all expenses.

Matt Morgan · Answer

@Rachel K Reiman, pull the trigger as long as you feel confident in your Reno and ARV numbers.  The biggest mistake I made when I first started was not buying as much as I should.  Again, make sure you feel confident you can hit close to your estimates.

Good Deal/Not so good deal?

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