1st 90 Days, offer and Accepted, Closing in 15 days

[Allen Higbee]

Hello everyone, in my first 90 days, I took the challenge and found my first investment property with incoming producing tenants. My ROI will be $7200 per year and the purchase price is $62,500, around a gross ROI of 11%. After taxes, insurance and capital reserves I think we'll be around 8%. The preexisting rental agreement is way under market value for a 2/2 at 917 Sq ft. Fair market comparable for rent's say my market supports $900 to $1250 per month, what a game changer for ROI. I'm buying the property cash, in a trendy neighborhood. My assumption to get moderate rent. I'd have to invest around $5,000 in new windows and some other capital, improvements like bathroom improvements, paint and texture. As for my ROE, I'm paying cash, so I have more to work with if I want to acquisition another property. I did find a gutted house for $27k I think I can use this for a house hack and off load some of my maintenance expense for one of my Subcontractors who wants to come to Georgia to retire. I'm a little torn get a gutted house that makes no income or find another 50K house with an occupied tenant to get more income? The answer is clear, the perspectives are torn.

[Luke Bricca]

@Allen Higbee 

Guts always make me nervous - there's typically a lot more reno required than most models suggest, which usually kills your ROI. Unless you are incredibly confident in your reno assumptions, I'd recommend getting a contractor out there ASAP to give you an accurate reno estimate if you want to go that path.

[Allen Higbee]

@Luke Bricca I am or was a GC and can see about 20k coming into a simple remodeling project. Of course, I don't want to waste money so I think building ROI with another money producing property would be the smartest decision. Having money made thus paying for remodeling aspects is much better if I'm going to Hack this home for a labor deal with by master carpenter with 5 years left in his work career, and I can't get full market rent. Thanks for your evaluation.

[Jonathan Greene]

I stopped reading because I can tell you are basing everything in the post off of financial assumptions. It's a house of cards. Even with your experience as a GC, where are you getting all of the other numbers? There are several things that have to be correct for this to have a chance and they are all tied together.