Need advise on a property in Philadelphia, good deal or no deal

[Jane Lu]

I just started investing in real estate. This is my first out of state property that I am looking to buy. I find this condo house in philadelphia, purchase price is 173,000 all cash payment. Rent in the area is 1200 a month. Need to replace the floor and some minor touch ups and a fresh coat of paint, would probably cost around 5000. After I included all the vacancy rates and expenses per month, there is $560 per month cash flow. The purchase cap rate is 3.89% and cash on cash ROI is 3.67%. I am not sure whether this is a good deal or not. (If I put 40%down, I will have a negative cash flow on this property (-$20)) I feel the numbers are not very promising, but yet I also want to take a step forward. Thank you in advance for your thoughts.

[Nathan Platter]

Hi @Jane Lu ,

To be blunt, this is not a good deal. Most investors aim to make 8%+ all cash, 13%+ if they finance it.

The busiest parts of New York tend to be difficult to invest in, so I'd consider going out of your local market if you're looking for the best returns (Memphis, Kansas City, Atlanta, Indianapolis, Milwaukee, St. Louis, Cincinnati)

The BP marketplace has lots of properties (pre- and post-rehab) for sale with good returns, and there are also companies that sell "turnkey" properties, meaning they are rehabbed and have a tenant and property management in place, all they need is someone to buy the rental.

Excited to hear about your next deal!