First investment rental property

[Yuriy B.]

I have recently graduated college and thanks to to all of the great people on here I am convinced real estate is the answer to a better life for me, meaning I could live comfortably from rental income when I have around 10 properties. I would like to start out by purchasing a single family home in the 100k-120k price range. As of now I am trying to save around $20k for a down-payment on a house in this price range. I am 25% of the way there and I feel that in a year I will have saved enough to place a down-payment. I have found a 3 bedroom home which is about 8 minutes from Cornell University and close to other schools. The seller is asking for $110k. I dont know the condition of the house but from the pictures it looks like it is in good condition. Three bedrooms homes rent for around $1500 a month in Ithaca, so that is the number I think I will be able to rent it out for. Because of a very large college student population the area has a vacancy rate of close to 0%. Below are some numbers I quickly estimated to see if this is a good investment. I realize that the property is going to be sold by the time I have enough saved to put a down-payment but I am just doing my research for now and trying to become good at analysis.  What do you guys think?. Is this a good investment?. Also is it accurate to assume that as a first time home buyer I will need to put down 20%?. I wish i could provide more information, but this is all I have as of now. Thank you all and I look forward to getting advice on this investment and any type of rental property advice!

Residential Income Property Analysis

Property Assumptions

Purchase Price$110,000

Down Payment$22,000

Loan Term15 Years

Interest Rate4.00%

Principal & Interest Payment$651

Closing Costs$0

Gross Scheduled Income (GSI)$18,000

Vacancy Rate7.00%

Number of Units1

Pro-forma Income Statement & Cash Flow

Gross Scheduled Income (GSI)$18,000

Less Vacancy$1,260

Total Actual Annual Income$16,740

Other Income (Laundry, Late Fees, etc.)$0

Gross Operating Income (GOI)$16,740

Annual Opertating Expenses

Accounting$300

Admin/Bank Charges$0

Advertising$0

Electricity$0

Elevator$0

Gas$0

Landscaping$0

Legal$200

Maintenance & Repair$2,000

Payroll taxes$0

Permits and licenses$0

Pest control$0

Pool$0

Property Insurance$440

Property Management$0

Real Estate Taxes$3,850

Security$0

Telephone$0

undefined$0

Tenant buyout$0

Trash$0

Water$0

Other$0

Other$0

Total Operating Expenses$6,790

Net Operating Income (NOI)$9,950

Annual Debt Service (mortgage payments)$7,811

Before Tax Cash Flows (BTCF)$2,139

Key Operating Ratios

Capitalization Rate9.05%

Cash on Cash (COC)9.72%

Gross Rent Mulitplier (GRM)6.11

Net Income Mulitplier (NIM)11.06

Debt Coverage Ratio (DCR)1.27

Expense Ratio (ER) Per Unit40.56%

Price Per Unit$110,000

Here is a link to the property:

https://ithaca.craigslist.org/reo/4827978957.html

[Bradford Myatt]

One thing I've learned as a first time investor is to not always rush into a home. Ithaca is a great location, especially with the College and Cornell nearby. You may also be able to attract weekly or weekend rentals to a place like Ithaca (AirBnB, etc.). Why do you list closing costs as 0? In the current soft market you could offer lower than the 110K and make some money going in. Set a price that is a good deal for you, and if it doesn't work out find another property. Making money going in is always a great way to start. Good luck!