Closed on my first rental! Thanks for all of the help everyone.

[Igor Messano]

Hi everyone,

I closed last Friday on my first rental thanks to all of the help I received here. First I wanted to say thank you to everyone for making this process much less stressful than it could have been. I also wanted to tell you guys a little about the deal as my wife in tired of listening to me talk about this rental at this point.

2 Bed, 1
Value: $70,000

Purchase: $52,000 (or 65,000 Financed)
Down Payment: $0 (Financed)
Closing Costs: $3,969

PITI: $348
Rent: $850
Vacancy: 10% (Property Managers say it is only 6% for the area but we want to be conservative)
Maintenance and Capex: 8%

CoC: 105%
Cap Rate: 10.58%

The maintenance and Capex sound low % wise but I worked with the appraiser, contractor, and some other resources to create an exhaustive list of all of the Capex's and it came out to about 4.5%. The property is only $850 sq ft with a flat roof ($1150 replacement). The Capex includes everything from HVAC, Roof, Kitchen Cabinets, Appliances, and flooring. The first floor is all tile (hardwood looking ones) and there is only about 300sq ft of actual hardwood in the bedrooms on 2nd level.

Property was down to a shell 8 months ago so everything is brand new in terms of plumbing and electrical.

For the purchase, I officially purchased the property for $65,000 with a 20% down payment. The seller agreed to pay $13,000 as part of a "Home warranty" after closing, so we essentially purchased the property for 52,000 with no down payment. We only paid the closing costs out of pocket.

What I am really excited about is that there is an empty lot to the right of the property where there used to be an attached house. The city has already agreed to sell us the lot for closing costs only (Around $1,000). The lot has been cleaned of all trash and weeds by the tenant whose kids use it to play. We plan on spending a little once purchased to paint the fence and maybe put some gravel or paving so it is not an empty lot. This could increase the rent of the property as no one in these city blocks have private parking or a real yard.

Philadelphia.