Calculating what to pay for a property

[Todd Speltz]

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!