I need advice please!

[Derek Brunson]

Hello all,

My wife and I have started saving for a down payment on our first rental property.  I talked with some local investors, real estate agents, and lenders so I could have a good idea of what I need to know about the local market and what to expect for our first investment.  We are looking for duplexes in Lubbock, Texas and we are looking at a specific area in town.  We know the duplexes in this area sell for $190k-220k and we need 25% down.  We have only recently started saving and don't have the $50k-60k+ for the down payment.  Today, I learned of an off market duplex that meets our criteria and would cash flow $500-600 per month.  This seems like a good deal to us.  The only problem is we don't have the down payment.  My questions are as follows:

Is this actually a good deal? 

3/3/2 per side, $200k asking price, $215k ARV, 25% down, 4.25% (lender says probably actually a little lower), $5500 make-ready (this is an estimate, I haven't seen the property yet but I am told it won't need much more than lipstick), $8K closing costs, $1200 rent per side, 8% vacancy, 5% each for repairs and CapX, 10% property management, Taxes/insurance $410/month, cash flow $600, all utilities are paid by tenants.

Is this a good enough deal that someone might be willing to put up the down payment in exchange for half of the cash flow?

Am I getting ahead of myself trying to do this before we have the down payment? 

Is this a marginal enough deal that I should wait for something better?

Do you have any advice on something I'm missing?

Thanks in advance for any help you can give!

Derek

[Lucia Rushton]

@Derek Brunson. Here is my concern; you haven't seen if and "think" it's only $5k in rehab. Where did you get that number ? If the wholesaler is marketing it at $200K and the ARV is $215K, what if they are wrong on the rehab costs ( which does happen....alot). Please go see the property and try and get a GC or someone who has done work before to go with you.

Keep us posted on what you do.

And either way if you don’t go through with it, this is all part of the education.