Advice on first investment for a beginner.

[Sterling Cox]

Hello,

I wanted to run a current investment I'm considering by the seasoned investors here on BP, and get some feedback.

Location:

My partner and I just looked at a townhome right outside the Loop yesterday. It's supposedly the best building in the complex, and all-in-all fairly clean, attractive and safe.

Situation:

There are current tenants, a family who has been there 7 years who do not plan to leave (his elderly mother lives next door). The current landlord didn't do much for repairs, so the tenant has been responsible, in other words he's aware of any issues. He's never been late with rent.

The Numbers:

The unit is 70's era 1200+ sq. ft. 2 BD/1.5 BR townhome. It needs some updates, but the tenant isn't concerned with the condition other than some minor repairs. Seller is asking $29.9K. We were thinking about offering $25K in cash. Comps show this is maybe $10-15K below the market around there (probably after the typical updates). Tenant currently pays $550/month rent. HOA is $150/month = $400/month cash flow. So if the $25K offer was accepted, that puts it at the 1.6% value (according the purchase price/rent rule...that I learned from BP).

Probably overthinking it, but I'm also very eager to use the BP forums as source of community advice. I greatly appreciate any input you all have.