Seeking Opinions/ Advise on a Deal
The Details:
3 Single Family rental homes on one .34 AC lot with existing long term tenants.
List Price $170,000
1 Br/ 1 BA - Current Rent $450/ Mo
1 Br/ 1 BA - Current Rent $450/ Mo
3 Br/ 2BA - Current Rent $550/ Mo
Homes are in Fair to good condition on the exterior, interior showings not available until under contract during due diligence period.
The Plan (currently)
Try to negotiate to a better but calculate rents based on full price offer. DSCR loan, 20% down ($34,000) at 8.1%. Market rents are $650 for a 1/1 and $1,200 for 3/2 in the area for this size house.
The question(s)?
1. We have the $34,000 to cover the 20% down, but would be left with around $8,000 to treat as an emergency fund for ourselves and properties. We can save $2,000/mo off our W2 income plus the $460/ MO cash flow the property would make IF we get market rents out of the current tenants. $200/ MO CF is our cut off on any deal. Rents would be $575, $575, $1000 to get the $200/ MO CF.
If YOU were in this situation would you pull the trigger on this deal? I understand everyone's risk tolerance is different and I appreciate any and all feedback. The concern I have is depleting our savings and being in a vulnerable position for 4-6 months while we save back up.
Thank you, Dekota