Is this a good Investment for a beginner!?

[Alex Fisher]

My parents own an Investment house in Columbia, SC. The Address is 1035 Karlaney Avenue, Cayce, SC 29033 located less than 5 minutes from campus and Columbia. . You can find it on Zillow.com listed at $164,900. Its been on the market Since September 2015 and has struggled to sell. My parents have owed the house for about 8 years in which they rented it out to me, and my brother, and friends whom all went to University of South Carolina. Its a 3bd 1bath house with renovated kitchen, new windows, and new roof, and new insulation. I am in the midst of getting my real-estate license so I can make some personal investments. Its obvious the 1 bath is a big hindrance to buyers which my Mom doesn't want to put any more money into the house to add another bathroom. Because I think the house its perfect for a rental, I considered the possibility of buying the house and putting about 10,000 for an additional bathroom off the back bedroom. I figured I could recoup some of the cost if I rented it out for a year to a few years. As a newbie, my biggest fear is making a bad investment being 24 years old and putting my self in some hot stuff. So I am asking experts on their advice as far as what I need to consider before pursuing this house as an investment. I figured I have an opportunity to get a good price for it because they are my parents, and my dad may even go in it with me so I am not stuck with the full burden of my first investment endeavor. Any ideas?

[Richard Toothill]

Hey @Alex Fisher. It's all about the numbers. To assess the deal, you'd need to provide figures on things like ... comparable prices for 3 BR, 1 bath homes in the area (to determine if $164,900 is a good deal), rent received per month, financing details (term [10,15,30 years], type [fixed, variable,etc], interest rate), and then all other expenses such as taxes, insurance, water/sewer, home owner's association, other maintenance costs, vacancy reserve (for when it's not rented), CapEx reserve (for when you need to buy new appliances, furnace, hot water heater, etc.). You'll then need to crunch the numbers to determine how much of the rent check you keep after deducting expenses. You're looking for a positive number which represents a positive monthly cash flow (cash in your pocket). The more cash, the better the deal! You'll get other benefits (taxes, paying down equity, potential appreciation, etc.), but for me, cash flow is king ... especially if you're a long-term buy/hold investor.

Good luck.  It's awesome you're getting started so young.