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Thank you, will pass on this one. Thanks for the formula, I will use this on all my deals.

Mike

Found a house through a realtor. Would like to know if these numbers work or not. The house is listed at $63,900. Seller is willing to hold back 20%. It's a 2 br prefab that is in good shape compared to the others in the area. There are lots af these in town, several listed from $65k to $69k, but not many selling. I would like to purchase and rent out. Rents on these (2br prefabs) run between $525 and $575. Taxes are $720/yr and insurance will be $360/yr.
How would you approach this? If I offer $63,900 and take the 20% offer the numbers look like this, which I don't think would be worth it.
Payment on $51,[email protected]%/30yrs = $313 (80%)
Payment on $12780@7%/15yrs = $115 (20%)
Taxes and Ins. = $ 90
Total = $518

The property is ready to rent, as all the cosmetic items have been done, and the seller is offering an appliance warrantee(I think the owner is an investor). Additional fixing to get it ready to rent would be under $500(new stove and bathroom fixtures). Considering closing/advertising/holding costs, etc., how much would I offer and how is the best way to approach this situation as the seller is willing to be somewhat flexible. Wish the realtor wasn't involved, and I could talk directly to the seller.

On another subject, I hear about people doing lots of deals, I have been "looking" for several months and have only done one deal(I purchased and rented out a Fannie Mae 1br). Seems to be lots of properties for sale but so many of them are not a "good deal" and I'm forced to pass on them. What is the ratio of looking vs actually purchasing? By the way this is a great forum, thanks in advance for the feedback.

Mike in Washington State.

Thanks for the responses. Thought for a while no one was listening. Anyway, looking forward to seeing what Biggerpo will come up with and I need to do some homework on ROIC numbers. Also a good point on cash flow -vs- equity.

Thanks,
Mike

I saw in a book sometime in the past that had a worksheet to help determine if a rental would be profitable or not. I cant seem to find it.

Does anyone have a worksheet that they use to determine if the numbers work out on a deal or not. I looking at a property but not sure how much to offer for it. I have done some rental research, but need a tool to figure the numbers, as I do not want to have negative cashflow.

Thanks,
Mike

I just purchased a 1br house for $53K. It was a Fannie Mae repo (in my town). Fannie Mae painted, carpeted, repaired the roof, and purchased new stove. I purchased a new fridge and wall AC, mini blinds, plumbing fixtures etc ($800 worth). I still need to scrape and paint the outside.

It just rented for $525 w/$400 damage deposit. My payment is $414 including taxes and insurance. I pay for garbage service@$15/mo.

This is our first and I'm wondering if this deal is too tight, just not enough cash flow. Considering 10% vacancy rate, ??% maint, repairs, and ???.

Also, I plan on doing the property management/repairs, so do I figure a percentage for that? The area is stable but not growing. Other houses on the street are $50K to $70K.

Does this look good and I just have a small case of buyers remorse or have I screwed up?

P.S. Talking about this purchase was cool, but now that I've done it. . . I have moved out of my comfortable rut.

Thanks for any comments/suggestions/opinions

Mike