Buying a property from Hubzu

[Brock Lister]

Hi everybody, I have a question about a property for sale on Hubzu here is a link to the same house listed on Zillow http://www.zillow.com/homes/46-Harbor-Oaks-Circle-Safety-Harbor-FL-34695_rb/?fromHomePage=true&shouldFireSellPageImplicitClaimGA=false. This property is in Safety Harbor, FL which is just outside of Tampa near Clearwater. The bidding opened at 137k and like most Hubzu auctions the reserve was not met so I put a backup offer of 140k. The seller is now considering this backup bid and I have 3 days to either confirm or reject this bid. 

My question is whether this seems like a good deal or not. This would be my first purchase so I'm sure I'm overlooking some things due to rookie mistakes. While trying to be conservative I estimated ARV at 220-230k. With the buyer's premium and technology fee the price would be 147k. It definitely needs a new roof and heavy cosmetic including renovating kitchen and bathrooms. I will be doing much of the work myself but will contract out as needed. Craigslist search showed similar houses in the neighborhood renting for $1500-1800. With an owner-occupied loan and a pretty favorable rate I am estimating P&I, taxes, insurance, PMI with 5% down the monthly total would be around $900/month. With vacancy, repairs, cap ex, and leaving room for potential property management down the road I'm wondering if this property will still cash flow positive.

I would greatly appreciate any feedback as I know experience trumps all the books I've been reading. Thanks and looking forward to hearing from some of you!

[Adam Ulery]

Hi @Brock Lister, don't forget to estimate vacancy, maintenance & repairs, and property management when estimating your cash flow. 10% of rent rate for each of these can be used for initial estimates.  So if you will rent the house for $1500, you would subtract 30%, or $450, for these items. Good luck!