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Updated about 8 years ago on . Most recent reply

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7
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Justin K.
  • Huntertown, IN
0
Votes |
7
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what am I missing? First deal numbers.

Justin K.
  • Huntertown, IN
Posted

Hello all,

I have been doing quite a bit of research lately and am within a few months of pulling the trigger on my first property. My question is, here in Fort Wayne, IN there are quite a few homes around the 15-30k range that pull 450-600/mo in rent. The cap rates on these run above 10% every time I calculate it. These properties are downtown but not in the worst part of town. Why would I not pursue these types of the deals with the high cap rates?

Cap Rate
Net Annual Income 2868
Purchase Price 20,000.00
Cap Rate 0.1434
Annual Expenses Rent
Taxes 312 5400 Annual
HOA 0 450 Month
Insurance 600  
Management fee 540  
Vacancy 540  
Repairs 540  
Mortgage 0  
2532  

Any insight would be great!

Thank you,

J

Most Popular Reply

User Stats

195
Posts
129
Votes
Greg Carrier
  • Investor
  • Granger, IN
129
Votes |
195
Posts
Greg Carrier
  • Investor
  • Granger, IN
Replied

We do houses that are valued in the 50K range but our average investment is in the 35K range.  We can pull $700 to $725 a month up here in Northern Indiana.  The risk that I see is in capital replacement costs.  a roof is a roof regardless if rent is $450 a month or $800 a month.  Same with cleaning up between renters etc.  I know others who do those houses and I am sure it works, but expect repairs and capital and turnover might be a bit worse than other properties.  That's my two cents in any case.  Good Luck!

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