I’m ready for my 1st purchase...but it’s a sellers market

[Hunter B.]

About me:

So if I have finally gotten to the point where I’m ready to make my first purchase. My end goal isnt to be loaded rich,but rather have some financial freedom at some point. I love my job so I will never quit. I’m handy and plan to at least the minor maintenance myself.

Financial:

I don’t own anything other than a pickup. I’m a single 25 year old guy. with around 50k total that I’ve saved over the course of 3 Years. I live in a rapidly growing area, one of the fastest growing in the nation. That means it’s a seller market for sure. People are getting well over full asking price all day long within a few days of hitting the market. Now causes some price inflation.

I’ve been wanting to buy a fourplex but the numbers don’t make sense any of them, so I’ve started looking at duplexes. I’ve landed on a Duplex I really like and it’s super clean with lots of recent repairs including new roof, new appliances, fresh paint and floor all around. It’s in a fantastic area which vacancy will be low.

Cost is 310,000; I was going to do an FHA loan with 3.5% down (10,800) which would earn me lovely pmi that would never fall off, plus a 1% loan initial fee and the Leander fee. Plus closing cost, inspection and appraisal cost. I estimate my cash total cash investment will be 18K.

The numbers I’ve crunched are as follows.

Gross operating cost per month:

Mortgage w/ pmi, insurance & taxes

$1850

Utilities

$80

Maintenance

5%

Vacancy rate

8%

Management

I’ll Self manage

Gross Income:

Rental income

$2200 worst case

$2400 best case

Total money invested:

18K

Basically I need advice from the people who have some good well rounded insight, because I can’t be sure that the people who have some stake in game(realtor and lender) are always cutting it straight, I trust them, but 3rd party insight is better. The economy here is great and growing. Everyone with money is buying marginal deals because the forecasted appreciation. Making it hard for someone like me who needs to find better than marginal deals, because I’m just getting started. My plan is to buy and hold. I can live in it for awhile and buy forecloses and do flips, after having a place to live and stop paying rent. Or I can move out in a year and do it again, or do I just keep renting and wait? Who knows when the market will drop.

Any and all advice is appreciated.

Respectfully

Hunter

[Jordan Moorhead]

@Hunter B. you outline what I hear every home buyer say when they fall in love with a property that's selling at market price. If it's clean and has a bunch of updates I don't want anything to do with it.

I want the piece of garbage that smells like cigarettes and is infested with rats. The duplex I bought in Minneapolis to househack smelled like cigarettes, had no working appliances and had lots of mice. I got a deal on it because the owner was making it hard to buy and it needed work. Now it's worth a lot more and it cashflowed from day 1.

Go find a **** hole my friend and make it not.