Hesitant to jump into my first deal?

[Carter Henderson]

Found a townhome in a great location of Pittsburgh that overlooks the city. They are asking $380k for the property and the sellers are willing to finance the deal with no money down and 4% interest rate. Motivated sellers, they have been trying to get rid of the property for 4 years.

The property currently has a tenant that pays $2500/month plus the utilities & water. Taxes are $6,823/year.

Is this a good first deal to jump on? Does anyone have advice on the numbers? Will it be enough cash flow for a first deal?

[Michael Tyler]

Everyone runs numbers differently so YMMV. But this deal would not work for me.

380k for 30yrs @4% is $1814 per month. That’s most of your rent right there.

Property tax is $569 per month. Insurance is $100 give or take, add $250 if you need a property manager, and most people subtract at least something for vacancy, repairs, and CapEx. The way I run numbers, you're -$733.

People do this in places like California where appreciation is factored into the long-term bottom line. If you love the property and have a spare $733 every month to pay for it then cool, but it would be a big roll of the dice.

Maybe there is room to raise the rent? Check the property on Rentometer. That, plus managing it yourself, and hoping the property is new build or at least significantly renovated already, could change the numbers to at least cash-neutral.