North Little Rock Property

[Chad Nielsen]

I am looking to by my first out of state cash flowing property. I’ve been working with multiple turn key providers. Currently, a property in north Little Rock as caught my attention:

5109 N Cedar St, North Little Rock

Asking Price: 140K

Rent: $1,295

It’s the nicer part of Little Rock and the elementary school is rated an 8/10. Does anyone have any thoughts on the property? Thanks!

[Erik Devereux]

Chad,
Two things to consider before you purchase.
1.  At the purchase price and rent payment, you're not at the 1% rule unless you bring a lot of money to the table.
2.  You can find better deals yourself if you get a team in Little Rock that you can have do the work for you.

I have a co-worker who has purchased 7 properties in Little Rock over the past couple years basically doing the BRRRR. He bought the first one through a turn key company with 20% down. That's a good chunk of cash. He met with the property manager who does management and then ended up finding homes online and purchased them himself with the help of the manager/agent/construction guy.  He has been able to buy with much less money invested in the total purchase without the turn key company not having to put 20% down.  
Now, the process is a little harder but it's saving him a lot of cash out of pocket.  Basically, he finds the house listed on realtor.com or other sites for approx $70K, offers $55K cash (his own HELOC), and settles on a lower price then asking (let's say $61k).  He has the manager/agent do the work on rehab which is usually only about $5K on smaller items.  Then gets an appraisal for more than $80K and does a cash out refinance and gets most of his money back.  So instead of putting 20% down, he only does about 3% out of pocket.  Cash on cash return is great.
That's a long winded response, but hopefully it makes sense.  Good luck.