Potential Deal, Need Advice - Niagara Falls, NY

[Chris Lofstrand]

Hi Everyone,

I am new to biggerpockets and this is my first post. I'm 24 and haven't done a deal yet but i've listened to about 50 podcasts, read a few books, and now I am looking to start acquiring rental properties. 

The property in question is being sold by a family member, and they have not yet listed it on the market yet. From an informal discussion I have heard they are looking to get about $55k out of the 3 br 1.5 bath SFR.

I would have no problem offering $50k off market because they wouldn't have to pay any agent commissions, but not much lower because as I said they are family. Details are as follows:

Downtown Niagara falls off Hyde Park blvd, not the nicest neighborhood but not terrible. Looks to me like comparable SFR's are renting for $700-750/month.

Property built in 1904 but extremely well maintained, move in ready. NF county website shows FMV at $67k

3 br 1.5 bath, 1.5 car detached garage with electrical hookup

Assessed at $57k, Taxes were $2,650 last year

Landlords typically pay water in NF, my estimate is $45/month

Homeowners insurance estimated at $50/month.

I put the property thru the BP rental prop calculator with what i thought were conservative estimates for capex, etc. and it showed positive cash flow of $50 per month if I only put 10% down.

Any thoughts/advice/critique would be extremely appreciated. Thanks in advance!!

[Jaysen Medhurst]

Great points, @Pamela DeLorenzo. Chris and his family member may both make out better with a lower offer that closes quickly and avoids realtor fees.

@Chris Lofstrand, my final thoughts would be that your repairs and CapEx look too low. I usually figure 7-8% each. Also, you should always include Property Management in your analysis, even if you're going to do it yourself.

1) Your time is valuable and you should be compensated for it. 2) At some point, you may want to hand off the day-to-day management and spend your time/effort finding new deals.

I know this is your 1st deal, don't talk yourself into a property where the numbers don't work.

If this were me, I'd pass.