Driving for Dollars Worked...

[Dayne Winters]

Hey all. I recently decided to drive for dollars on 20 properties I wrote down that were distressed, as I’m looking for my next deal. I called an elderly couple who said my timing couldn’t have been better. They had, just two days prior, talked about selling the property, before my ohone call. They just recently completely renovated one side of their A House Duplex and added another bathroom. The other side has renters who have been there for 10+ years. They would like to give me first crack at purchasing the property because of my phone call. I believe to be emotionally invested in this because I found this property myself. However, the numbers are as follows and any input would be greatly appreciated: Asking price-$270,000 Unit A Rent-1400 Unit B Rent-900 (10+ year renters) PROPERTY APPRAISAL-$260,000 THIS DOESNT MEET THE 1% RULE, BUT WOULD WITH UNIT B AT MARKET. THANKS GUYS!

[Account Closed]

@Dayne Winters $270k for an A house is up there. Not too bad in todays local market if it's well taken care of and somewhat updated, but like @David Bardwell said, forget the purchase price until you're finished analyzing. How is the HVAC system? Those old govt homes are big and not very well insulated. The old "octopus" style systems are all garbage, and they have a ton of windows, so energy efficient they are not. Is the basement finished? Egress windows? You need to do some research on these and see exactly what it is you may be getting yourself into. I have seen guys buy these and end up way over their heads due to unforeseen expenses. I have a hard time getting $1,400/month on that type of place. Most I have seen is around $1,250-1,300 if its newly updated/remodeled. If it were me, I would calculate PITI + any other costs you as the landlord would pay, then see how much that leaves you cash flowing at the end of the month.

You're wise to use the 1% rule, but in this area it is harder and harder to hit, so be patient until you can. I have seen a ton of new (hate to say it) "wannabe" investors overspend in our area over the last few years. They are under-analyzing and overpaying for properties (which has also made the market stay overpriced), so just keep in mind that you don't HAVE to buy. You keep beating the streets and knocking on doors and you'll find one that works for you.

On a personal note, $270k blows me away. 5 years ago you could pick these up all day long for $180k. Just shows how fast the prices around here can rise OR fall. Hell, I walked away from one last spring at $210k. But, I am a cheap ***, so...lol.  And  use the BP analyzing tools, they are amazing. Good luck!