Greetings,

I'm looking at a house selling at 136k. It's owned by a landlord who is occupied by three tenants who are serious on staying/renting. Seller agreed on selling house for 128k. This house is not listed on market, and the seller is trying to work with me the best they can.
I like the tenants, they're all clear money wise and lived at the house for three years.

Best loan I could acquire is 6.8% at around $1150 a month. I'm considering covering the closing cost by loan making the total mortgage around 134k.

Rent would be $1350 a month split by three people being $450/person/month. Renter pay utilities.

House is great shape with only minor paint/drywall dmg. Otherwise very nice. Three bedroom, 2 bathroom. Renovated basement. Foundation/electrical good. City water and sewer. New roof, hot water tank and furnace. Decent two car garage with a fenced in backyard.

Down payment $4500
Yearly cashflow $2400
That would be 54% return on my money.

If I took off $100 a month for the common repair, cashflow would be $1800 = still a 40% ROI

Me: I have good credit (750). I live in a very small home currently owned and paid off. (1000sqft) No debt. I got a little over a years income saved.

I've been looking at houses since 2020 when I was preapproved for a 3.5% interest rate. I didn't buy than, which I do regret considering the rising expense in housing and mortgages. Now I have the opportunity to buy in my opinion a nice property. I can not find something like this house at this price $128k no where near me. It's all $150k+ and in massive need of repair.

My goal is to rent this house out for the foreseeable future, then if I develop the need for more space (stating a family) I can move into this house. This could be a couple years from now. If loans go down, I refinance. If they go up than I'm grateful I bought when I did.

It scares me to think that if I don't buy this house I will somehow be locked out of homeownership. (just a fear; worst case scenario) Which is a big deal to me considering I can't live with anyone in my current house. Unless I sold and lived in some 2 bedroom paying renting, which I'd like to avoid.

What are your thoughts ? Is this a bad idea?

Cleveland, Ohio

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