North Dallas Investment - 4BR 2.5BTH Colonial REO 128k - Buy or No Buy?

[Sunil Kumar]

Friends,

Anyone with local expertise in the Dallas area will be better able to assist. I am looking at properties in Frisco and McKinney.

I am evaluating 2 REO properties, single family homes in newer areas of town. Advantage is that they are relatively cheaper and newer (less maintenance). Disadvantage is that I don't know if there is enough rental demand? Who would rent far from desirable areas to be in (downtown, airport, etc)? Most people typically buy in this area that I am looking at.

Numbers are as follows:

Property Type:
2005 yr built
4 BD
2.5BTH
2096 sq ft.
3,700 annual taxes
$61/sq ft.

Anticipated rent based on recent comps: $1,360
Tax/mo: 308
Insurance: $125 (guess)
Management fee (10%) = 136
Repair reserve (5%) = 68
Vacancy reserve (5%) = 68
Total cost before mortgage = $706 (just around the 50% rule)

Anything else (costs) I am not anticipating in this equation? Trying to avoid surprises and ensure I capture all of it.

Given the area and potential rental demand, what do you recommend? Buy / no buy? Are there better alternatives (i.e. Plano, Allen ?) Plano has older built homes, and I am trying to keep it to year 2000 and newer to minimize maintenance issues.

Appreciate your assistance in advance

Thanks!