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Updated over 4 years ago on . Most recent reply
Calculating what to pay for a property
Hello everyone. I have been listening to BP posdcasts every minute I get. As I said above, I have been approached by a couple to buy their property in the same neighborhood that I live in. I have researched the houses that have recently been sold in the neighborhood and have a pretty good handle on what properties are worth. This could would like to work together privately to transfer their property. It is a single family home in Rochester Mn and has been maintained very well but is not super updated, but classically nice. I have ran some numbers and compared other similar rentals to find out that a rent of $1500 would be appropriate to utilize in a cash flow. I would like to hold this property as a rental and would like some more advise on a more solid number to offer the couple. They are not interested in financing me (they think). I have a w2 job and so does my fiancé. I’m sure there are lots of pieces I am leaving out that are necessary to evaluate my situation but I would like to learn more about how to value what I can afford to pay, by making sure I am accounting for all unforeseen expenses beyond taxes, insurance interest etc and still make ends meet with the property.
Thanks for your help BP community!
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You should definitely hire a home inspector licensed in your state - and be with him/her on the visit, taking your own notes. It's worth taking a half day off from work to do this. They provide a written report, but in my experience, your own notes, photos, & experience having the inspector show you what they're looking at are essential.
To get more detail, you can then research the cost of repairs with licensed contractors - or get bids, if your seller will let you go back to the property to do this.
Bigger Pockets has some calculators - you may have to buy the Premium/Pro Membership for $300/year to get access but it's probably worth it if it helps you avoid costly mistakes.
You should also talk to at least 3 experienced licensed mortgage bankers/brokers in detail about what loans you can get qualified for.