Its GO TIME. Second opinion please

[Michael C.]

I am almost under contract on a property here in atlanta please read details and let me know if you see any big red flags.

Price: 70k  25% down plus closing cost will have me around 19,900 out of pocket

2bd/2bth currently rented for 950/mo comps in area represent this number as average for the neighborhood

Currently livable but definitely needs work.

Shingles soon

co/alum outlets for aluminium wiring(old house)

1 tree needs to be removed at some point SOON after arborist declares dead.

The numbers seem good but I'ts a lot out pocket for such a small property I wonder if I could make better use of my funds.  

Recap

70k 25% down

950/mo rent

mortgage will run about $420/mo plus 10% PM($95)

numbers look good on calc.  Honestly I'm just nervous.

What you guys think 

Calc is below

[Dan Mahoney]

@Michael C. This is a typical deal for certain intown neighborhoods in SE and SW Atlanta.  You can buy a habitable house for less than $100k but not one in good shape.  In today's market, there is enough demand for rentals that the numbers work.  As your analysis shows, you can make money if you don't get unlucky with tenants or repairs.

You said it was close to MARTA, which stop?

You know you'll have to replace the roof, wiring and tree, but you don't know exactly when.  That seems like an acceptable risk as long as you have the cash to fund these as they come up.  I agree with other posters that this is going to cost substantially more than $3,000.  The roof alone will be more than that.

You didn't mention the condition of the HVAC/mechanical system.  Often times houses at this price point have an HVAC system near the end of it's useful life.  That's another $5,000 check you'll eventually have to write.

Re: @Greg Scott suggestion, you could probably drive value over $100k if you renovated everything, but I would not recommend using hard money and counting on a refinance. Appraisers in Atlanta can't seem to figure out valuation in neighborhoods where recent sales range from $20k-$150k. Sometimes they'll comp you against a boarded up REO and blow up your refi. That risk is ok if you are trying to pull out your own cash but not if you have a HML with the meter running and a looming balloon payment.