Advice on a deal on a Single family home as a rental

[Pam R.]

Hi all. Any advice/thoughts welcome here.

I've only bought/rented duplexes so far, so single-family homes are a new venue for me.

I'm getting ready to look at a bank-owned property. Have looked outside, and through the windows, and it looks in pretty good shape. Needs some paint, new carpet, I don't know what else until we get inside. But not bad at all.

The bank is taking bids for another day, so we'll look at the inside tomorrow and need to make an instant offer if we're interested. There are already multiple bids on the property they are holding.

It's a 3 bedroom/1 bath. Property taxes $1300/year. It's an ok neighborhood (close to some train tracks and a small industrial area), not unsafe or trashy. Rental potential is reasonably $700/month, probably more. But I'll go with $700.

Neighboring houses have property tax values of $80k and up, and the few with transfer records I can find paid anywhere from $80k to 130k (that $130k guy must be taking a bath buying at the market peak).

My thoughts: I can go in up to $40k - all cash. That's any combination of sale price + renovation cost. $700/month in rent, I set aside $300/month for insurance, taxes, maintenance, net out $400/month. We'd manage it ourselves.

So - good deal or bad deal?

Thanks in advance for any thoughts or suggestions.