Newbie Investor Seeking Wisdom/Advice On His First Property

[Lucas Hunt]

Hello BP Family - I am looking for some of your wisdom and/or opinions on my current investment situation. I will not take any of your responses as investment advice!

I have made two aggressive offers on a couple of single-family homes in the northern suburbs of Houston, TX. At this point, both offers have a strong likelihood of getting accepted. This will be my first long-term hold investment property and I am only able to choose one property. They are both turnkey. My current goals are that I am looking to get a base hit so that I can get into the game and build some wealth. I am struggling with choosing between the property that has average cash flow in a class B neighborhood [PROPERTY A] versus a property that has below average cash flow in a class A neighborhood [PROPERTY B]. I have provided some info on both properties below. I can imagine that some of you were in my shoes some time ago. Is there any wisdom/insights that you would be willing share that could help me make a decision? I appreciate all of you!

Property A

Year Built: 2013

Estimated Home Value: $233,000

Offer: $210,000 w/ a $10k credit to the investor (me)

Year 1 Estimated Cash on Cash Return: $150 / mo

Neighborhood: Class B

Nearby School Rating: 2/10

YoY Appreciation: 3%

Home Layout: 3 bed, 2.5 bath, 2 car attached garage

Property B

Year Built: 2009

Estimated Home Value: $226,000

Offer: $215,000 

Year 1 Estimated Cash on Cash Return: $50 / mo

Neighborhood: Class A-

Nearby School Rating: 7/10

YoY Appreciation: 3%

Home Layout: 3 bed, 2 bath, 2 car *de-attached* garage

[Lucas Hunt]

Quote from @Nate Sanow:

Quote from @Lucas Hunt:

Quote from @Nate Sanow:

definitely need rental income to better analyze 

$1700 on Property A

$1750 on Property B

 I’d probably shoot for the better cash flow.  Down the road you may want a better neighborhood but for now , you can always get started better if you’re collecting some income. It doesn’t sound like the better cash flow is in a bad neighborhood either. Just different.

I hear you Nate. I was thinking the same thing. I appreciate your insight here!