SFR rental in C class. Good deal?

[Jesse Richardson]

Hi BP,

I'm working on another deal and was wondering what you all thought as experienced investors.

It's an SFR in a C class neighborhood. It has 4 beds and 1.5 baths about 1670 sq. Ft.

Asking price is $35,000, but hoping to get it for $30,000 for a cash buy.  It needs approximately  $10,000 to get it rent ready.

Rent is roughly $900 to $950.

Insurance is $72/month

Taxes are $150/ month

Water/sewer is paid by me and is estimated at $70/month.

I estimate repairs, cap ex, maintenance and vacancy to be 36% total.

No mortgage.

That puts me at around $250 to $300 a month cashflow.  I'm not expecting much for appreciation.

Would you do it?  What do you think?  Do you need more info?

Thanks,

Jesse

[Steven Gesis]

Originally posted by @Jesse Richardson:

Hi BP,

I'm working on another deal and was wondering what you all thought as experienced investors.

It's an SFR in a C class neighborhood. It has 4 beds and 1.5 baths about 1670 sq. Ft.

Asking price is $35,000, but hoping to get it for $30,000 for a cash buy.  It needs approximately  $10,000 to get it rent ready.

Rent is roughly $900 to $950.

Insurance is $72/month

Taxes are $150/ month

Water/sewer is paid by me and is estimated at $70/month.

I estimate repairs, cap ex, maintenance and vacancy to be 36% total.

No mortgage.

That puts me at around $250 to $300 a month cashflow.  I'm not expecting much for appreciation.

Would you do it?  What do you think?  Do you need more info?

Thanks,

Jesse

Jesse, based on my experience in Cleveland, if you are buying at $50,000 all in for SFR, you will get the rent that you quote for a limited amount of time if you can even get it, no magic, just like anywhere else, expect a high tenant turn-over, short term tenants, expect high turn-over cost. I have not seen a $10,000 repair on $30,000 purchase end up being a success, unless you are seeking high risk and high reward, I think you need to take high reward out of the equation, because you will find yourself exhausting money to replace tenants and complete on going maintenance.

Insurance seems a little high.... perhaps because of the area or the condition of the house? 

C - neighborhood for $50,000 I am interested in seeing this home myself : )

If it sounds to good to be true......... 

Again, this is just based on experience and having a very extensive background and knowledge of the entire Cleveland marketplace.