Should I or Should I not??

[Tabitha Rivera]

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?? 

[Phil Bottfeld]

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