First Rental: Is it worth it?

[Tarvis Carson]

Hello everyone,

I'm 23 years old and my friend and I are looking in to buying our first rental property. We found a duplex that is listed for $200k and is 2100 sq/f. The property is outdated inside it is from 2007, it currently rents out for $855 a unit. We would like to update the flooring, paint, kitchen counter tops, and bathrooms; we are not sure how much this would cost yet. We are using the VA home loan so we are not required to pay a down payment.

Estimate monthly mortgage+taxes+insurance will be $1400.

Rental income $855x2= $1710

Total cash flow of $310

We are leaning towards a duplex instead of single family home because we think it will be a better cash flow. Is this property worth it number wise? or can we do better. Thank you.

[Brendan F. Nagle]

Cash flow is not 310. Put some numbers in for Capex, vacancy and maintenance. Your renovation while not huge will takesome time. I still say do the deal but my caveats are simple. Your first rental is an education. You will make mistakes. Mistakes cost money, they are only bad if you don't learn from them.

I still own my first one, My mistakes are blaring red flags now but at the time it was a big deal. I didn't fire the first contractor fast enough. Good at rough work, crappy finish work. My partner and I poorly designed a bathroom. We gutted the house. We could have designed a bedroom bathroom and closet with the space. Instead we didn't. My wife still makes fun of it.

Think baseball, hit a single or double on this one. Do the work, learn new skills to make this deal profitable. The next one do it again or go bigger. Feel free to reach out. Good luck on your journey.