1st Time Investor - Need Help Analyzing a Deal

[Jenny Sung]

Location - Spring, TX

Built in 1977, 3/2, approx 1500 sqft

Contract Price - $120k

Locked-in Mortgage Rate - 3.5%, 20% down (no points)

Total Monthly Rent - $1450

- Comes with Section 8 Tenant (Mom & 3 kids)

- Buyer pays title insurance

- Big items to account for after inspection (Est $2-2.5k for bare minimum):

1. Tree too close to the house, needs to be cut down
2. One side of the garage door opener has no outlet to plug into (there are a total of 2 single garage doors)
3. Kitchen sink drain pipes are "amateurishly" done
4. Rusting of the evaporator coil in the attic (20 yrs old)
5. Attic lines don't have enough insulation
6. One bathroom toilet is cracking and needs to be secured
7. Roof is missing gutters
8. Roof shingles vs flashing wasn't done 100% correct, needs more space

The buyer agreed to a $500 closing cost credit. Would I be dumb to not move forward in this deal?

[Nicholas Lohr]

It doesn't sound like the repairs are really that much an issue from your list there.

What you should be more concerned about in my opinion is this part, "Comes with Section 8 Tenant (Mom & 3 kids)"  Now she absolutely could be the best tenant in the world but she also may not be. Are you prepared for the latter?

The most frustrating / worst part of investing for me over time has definitely been inherited tenants, with repair and construction headaches coming in a distant 2nd. It's definitely part of life for us real estate investors, I'm just saying to be prepared for it.  Especially in tenant friendly New York.