Under contract on my second property, looking for opinions.

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The property was originally listed as 430K  and sat on the market for 35 days with a couple price reductions down to 375K. We placed an offer of 360K and it was accepted. The home is in a decent area which is East Mesa if your familiar with the Phoenix market. I know prices are dropping and I'm second guessing whether I built in enough equity. I'm putting 5% down so I should have a balance of 342K. I'm taking a rate at 5.75% with no buy down and my concern is that I will have lost too much equity to refinance the property when rates eventually drop. 

I found two recently closed identical comps and they sold for 440K 04/01/2022 and the other for 420K on 06/01/2022. This purchase would be my first step towards investing in property since I will be retaining and renting out my first home so I'm a little anxious about it all. I feel that I'm getting a decent discount on the property to pad my equity, but what are your thoughts?

Thanks in advance!

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Quote from @Account Closed:

Quote from @Account Closed:

The property was originally listed as 430K  and sat on the market for 35 days with a couple price reductions down to 375K. We placed an offer of 360K and it was accepted. The home is in a decent area which is East Mesa if your familiar with the Phoenix market. I know prices are dropping and I'm second guessing whether I built in enough equity. I'm putting 5% down so I should have a balance of 342K. I'm taking a rate at 5.75% with no buy down and my concern is that I will have lost too much equity to refinance the property when rates eventually drop. 

I found two recently closed identical comps and they sold for 440K 04/01/2022 and the other for 420K on 06/01/2022. This purchase would be my first step towards investing in property since I will be retaining and renting out my first home so I'm a little anxious about it all. I feel that I'm getting a decent discount on the property to pad my equity, but what are your thoughts?

Thanks in advance!

If your purpose is cash flow, you figure it one way. If your pupose is fix & flip you figure it another way. If your purpose is to live in it you figure it yet a different way. 

It sounds like you will be renting your first home and living in the new one?

I'm figuring a 10% drop in prices from May 2022 to Dec 2022 in the Phoenix/Mesa market. 

I started in this business when interest rates averaged 8% - which is the long term average for mortage rates historically. Anything below 8% is a deal. To hope and wait for rates to drop enough below 5.75% to refinance isn't how I would look at things. 

If you are going to live in it for 5 years or more, you are probably going to break even with expenses (selling one and buying the next) because cost of sales runs around 8% of the sales price. So, your property needs to appreciate about 8% to break even. 

If you are going to live there for 30 years, you simply refinance over time as things make sense to do and don't worry about it.

 My long term goal is new purchase a new primary home every year or two and retain the properties to build a small portfolio of single family homes. My total payment on this new property will be $2250.00 and the current market rate is around $2000-2200. Just hoping to make numbers work within a couple years so I can purchase a 3rd home to keep investing in property.