First Rental - How to set rent, Property Insurance

[Hilary Hageman]

My husband and I just purchased our first investment property: a 3 Bed, 1 Bath, 1075 sq. ft. single family home in Niles, Michigan.  The asking price was $55K, we bought it "cash" (Home equity loan financed, $1,000 down) for $48K.  We expect to have to replace the furnace, stove, and a cracked window but otherwise the property is turnkey.

Who do you recommend for property/house insurance?  We currently use Liberty Mutual for our own home but I feel we're paying too much ($1100/year.)

Property taxes on this home are $1200/year at 0% homestead.  With these costs figured:

100 (insurance) + 100 (prop. tax) + $500 (Home equity loan payment) + $50 repairs reserve = $750 (!)

I likely can only charge $825-850 max for this property given my area.  That leaves a smaller cash flow than I was anticipating.  Is this an appropriate cash flow margin?  How can I reduce that stupid property insurance cost?

[Roger Vi]

Congrats on the first purchase!

For insurance, just shop around. Make sure you let everyone know you are shopping around too, it gives them an incentive to give you their best rate and service.

In your title you asked how to set rent? Look at other similar rentals in your neighborhood. Search on craigslist, zillow, rent.com, or jsut drive around calling for rent signs. 

You will get a million different answers on your cash flow margin. Most important, does this property meet your goals? Is cash flow what you're after? Is there potential appreciation? What is your exit plan? You do not want to just get the numbers right for one month, you want to have a clear picture of the entire life of this investment. 

There will always be more you need to learn. As long as you keep learning you will be ok. So just take it one step at a time and make sure you remember your goals.