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Updated over 6 years ago,
Cost + repairs less than 1% with long term tenant - buy?
We are under contract for $68k SFH. Inspection came back and I estimate $15k repairs (which includes $5k for two trees to be removed hanging over the roof, and $5k for a back deck that is wood leading to concrete stairs - terrible construction). Appraisal came in at $76k and current long term tenants pay $650/mo - market is closer to $850-900.
Tenants have been there 4 yrs and take care of the property - do simple repairs.
I’ve read so much about running a charity vs a business, raising rents slowly, good tenants are like gold, cost of vacancy, etc. I’ve estimated their income/ exp and I think they could afford $850/mo, but they are already jaded from the prior landlords that pushed off maintenance issues
This would be my first investment, and I can’t decide what to do. At market rent, after repairs, I would make 1%. But to retain good tenants and not have vacancy, I would be less than that.
Our exit strategies are to sell it (super hot market here), or live in it (as it’s a place we would want to live anyway).
I’m anxious to get my first property done with, but I don’t want to take a bad deal either.
March towards the close or am I blinded by eagerness to get started?