Can I have some feedback on this deal?

[Matt Charette]

Hey BP!!! It’s official I have my first accepted offer (phew). I was hoping to get community feedback on the numbers. I’ve got some feedback from my biggest critic, my dad, and he’s advising against it and pretty much rentals altogether even though he’s had success with MFs and garage rentals for decades.

The property is in Providence, RI, in a family neighborhood. It’s a couple streets away from a gold course and 2 miles from Rhode Island college.

It’s a 2 family, side by side 1232sq/ft total. Built on a slab foundation in 1982, has electric based board heating broken into in 3 zones. All the plumbing looks great windows have been updated over time and the roof is 12 years old. The only capital expenses or repairs in the next few years are the two electric hot water heaters (13yrs old) and carpets and maybe some interior paint. The carpets and paint I would do after closing before my first tenant in one apartment. The other has long term low income tenants that I won’t touch to start. The other unit is vacant.

It’s been listed for 112 days, coming down monthly from $185k to $160k. My offer was accepted with some provisions at $145k and I’d pay my closing costs. It rents for $1800/mo and I’d only have to cover water, sewer, snow removal and maintenance. I’m accounting $100/mo for water and sewer. Snow and lawn maintenance will be on me. Also it’s an hour away, ugh. I’m preparing for insurance at $125.

One item to highlight is RI sales law that will charge an owner who lives out of state (I live in Massachusetts) a whopping 6% off the top which hurts.

After budgeting for repairs, expenses, and property management I’d cashflow $170. Without property management it would be $360.

So at $145k with an 25% down and an interest rate of 4.875 (I'm paying one point at $1,087). Real estate taxes were $3452 in 2018. My PITI is coming in at $946.

I realize I probably put this in haphazardly, my apologies, but I’m hoping I can get some feedback on this deal to either reinforce my decision or to have my dads back and convince me out of this deal.

Thanks everyone!