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Updated about 12 years ago on . Most recent reply

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Feedback Requested on Rental Numbers

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Posted

I'm a relative newbie investor looking at purchasing a SFH but wanted to evaluate my current situation before I decide. I've also been reading quite a bit about the 50% and 2% rules and wanted to validate my understanding of them. I'll use the property I'm looking at as an example.

SFH for sale for $145k. From what I was told, the seller is eager to sell. It is in a desirable area of town in a decent neighborhood in a great school district. The home needs new carpet/tile and a minor indoor paint job. Otherwise, it has a new roof, new HVAC, new water heater and includes all appliances. The seller's agent said the seller would be willing to give a carpet and paint allowance. So, assuming I'm able to get the property for say, $140k, my monthly PI would be ~$500. With new carpet and paint, the property would be ready to rent. My analysis shows the house would rent for ~1250. This would result in the 2% rule being more like 0.9%.

Thoughts?

Applying the 50% rule ($1250/2 - $500) would result in a cash flow value of $125. I've read that anything over $100/door is acceptable. Is this correct? Did I do my analysis correct? If so, thoughts on the value?

I'd also like to mention I do my own property management/maintenance. I know there is more money to be made with rehabs and what not but I don't feel I'm ready to go there just yet.

Any thoughts, comments, or feedback on the situation I described above?

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