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Updated almost 5 years ago on . Most recent reply

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11
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Mike Bussing
  • Montrose, CO
5
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11
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Should I invest in this rental property?

Mike Bussing
  • Montrose, CO
Posted

I am looking at an out of state property to buy as a rental. This would be my first out of state property and I want to know if others think this is a deal worth doing or not. 3 bed 2 bath home in Ohio.

The purchase price would be $167,000. The property is currently rented out for 5 years max (about 4 years remaining) for $1,375 a month. Assuming a 4.63% interest rate over 30 years.

Here is my budget as best as I can get: Taxes $1,734, repairs $750, Property Management $1375, Insurance $1,271 (this seems kinda high). 

I am calculating about $261 a month cash flow and a Cash on Cash ROI of 8.36%.

Thoughts? Is this a good find or can I do better? 

Most Popular Reply

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Replied

@Mike Bussing so after the tenants move out what vacancy factor are you using. What if you have to evict before the lease is up. I use 8% of rents. Do you have an indestructible house that nothing wears out. You have no capex. My capex budget includes roof 25 year life span, floors 10 year life span, appliances and hot water heater 12 year life span, hvac 20 year life span, bath and kitchen remodel 20 year life span, etc. I use 10%.  Subtract 18% or $248  from your present cash flow you will have a whopping $13 per month return on your cash invested. 

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