Skip to content
×
Pro Members Get
Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
ANNUAL Save 54%
$32.50 /mo
$390 billed annualy
MONTHLY
$69 /mo
billed monthly
7 day free trial. Cancel anytime
×
Take Your Forum Experience
to the Next Level
Create a free account and join over 3 million investors sharing
their journeys and helping each other succeed.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
Already a member?  Login here
Starting Out
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated about 9 years ago on . Most recent reply

User Stats

7
Posts
1
Votes
Tabitha Rivera
  • Big Spring, TX
1
Votes |
7
Posts

Should I or Should I not??

Tabitha Rivera
  • Big Spring, TX
Posted

Hi, guys and gals, alike. I am new to this industry with learning still my number one agenda before taken most actions. I have seriously been interested in this for a while now and still trying to gain as much knowledge as I can before diving into something unaware. However, because there is always an exception, I have recently stumbled upon a really, really, and I use two reallys because its that good, deal. For the moderately experienced it would be a no brainer, and even for the beginner it would be a steal of a deal. I know it is a great opportunity but I still have reservations and would like help weighing the pros and cons so to speak.

I found a house that I have a 25% down payment for, I know the market it is in and I know that it will have a very low vacancy rate, and a very good cap rate, even if economy changed I would have the capital to back up all PITI. With that being said I have a student loan that could use that money and my credit score is not good at all. I feel like this house could help my credit in that I know that the numbers could work in my favor.

I just don't know if as a beginner I'm getting in over my head or not being cautious enough. The down payment would take out my safety net but I am working and could build it back up in no time even taking into account a lack of resident.

What to do what to do. Maybe I am trying to dive the deep end before knowing how to tread water. Maybe I need to do more homework and pay some more dues before I bite off more than I can chew. Mixing analogies! Help BiggerPockets?? 

Most Popular Reply

User Stats

126
Posts
36
Votes
Phil Bottfeld
  • Certified Public Accountant (CPA)
  • COOPER CITY, FL
36
Votes |
126
Posts
Phil Bottfeld
  • Certified Public Accountant (CPA)
  • COOPER CITY, FL
Replied
Originally posted by @Account Closed:
Originally posted by @Tabitha Rivera:

I found a house that I have a 25% down payment for, I know the market it is in and I know that it will have a very low vacancy rate, and a very good cap rate, even if economy changed I would have the capital to back up all PITI.

You really really don't know anything about cap rates.  Making an uninformed decision is probably not a good idea.

 Hi tabitha you are doing great, let me explain what a direct cap rate is.

Take the annual income of the property less all expenses (taxes, insurance, maintenance , commission...etc) do not include any debt related costs. Debt related costs included PMI, interest, principal payments etc. The net profit from your all your annual revenues and your expenses is called your net operating income or NOI.

Take your NOI and divide by the cost of the property. The % is your cap rate.

Feel free to message me if you have any questions.

Best of luck,

Phil

Loading replies...