All Forum Posts by: Kirtley Whittington

Don't forget to include 10% vacancy in your expenses. Any idea what the actual appraised value is? Tax value is never accurate in TN anyway. It sounds like a decent deal but that depends on what other similar properties in the area are selling for. It would be nice if you could pay cash at purchase and then turn around and get a bank loan. If you are actually buying at a good price for your market, the appraised value should be around 120-140k. The bank should loan 80% of the appraised value which would cover your entire purchase cost, thus refunding your cash and allowing you to own it for no money down. That's the best way to buy IMO.

Not sure how long you have been looking but I would keep looking for a better deal. The numbers aren't impressive and buying on hopeful appreciation doesn't always work in your favor. It's better to buy on what you know than on what you hope for.. Best of luck going forward!

Christopher, your numbers look good imo. I have 30 rental units myself and I would buy based on your numbers in most (not all) areas in my market. Regardless of appreciation, your cash on cash return is good. While it is true that capex could significantly lower your returns, you should be fine since you included mgt fees and you self manage. Did you pay the renovation costs out of pocket? What is your total cash contribution here?

Numbers look above average imo.

Numbers look great here!

Run away! Numbers aren't even close to 1% rule which I find dismal anyway.

The cap rate would actually be in the 16% range, right? His cash flow before mortgage expenses (NOI) is 365+180 (mtg payment) =545 x 12 = 6540/40700 = .16% cap.

This is a good deal if you ask me. This easily surpasses the 2% rule if both sides are rented. If you live on one side, you shouldn't have to make payments out of pocket as the other side should cover mortgage, taxes, ins, repairs, etc..

At a minimum, I want the monthly rent to be 1.5% of my total investment (purchase price + repairs, etc). I try to get to the 2 % mark though. Your property wouldn't pass the test.. It still could be a decent buy if it is in an area that is experiencng above average appreciation, but you can't count on that. I will settle for properties that yield in the 1.5% range if the area is on the way up (lots of rehabs, new construction). If the area is stagnant on the other hand, I won't buy unless I can hit the 2% mark. That being said, everyone has their own views on what return is satisfactory. It may be difficult to find those 2% deals in your area.

Med low is a better description of the properties that I am refering to. There is a difference between the 'hood' and the neighborhood that I speak of. As far as sect 8 rent comps go, I would say that they are on par with marke rent. For example: I have purchased several 3/1 or 3/2 houses in the said area for around 40K. The houses are in decent condition and don't need much work other than paint, cleaning, etc. Sect 8 will pay $850/month for a 3 bedroom. You would be really hard pressed to find a free market tenant that would or could pay that much in this particular part of town. Even if so, I would be concerned that they are paying more than they can really afford.. I guess each area is different.