$60k Budget (all-in) -- Is Allentown worth it?

[Daniel Akerman]

I'm a real estate agent in NYC, and looking to invest in MF -- ideally a BRRRR strategy, but straight buy and hold is fine, too. I've been looking at various areas in the country, including Allentown. Total budget (purchase, closing, any rehab, etc) is about $60k. Would probably use some level of financing, but the $60k is from a HELOC, so the cash flow has to be good enough to cover the debt on the asset, plus the cost of money on the HELOC. Would love to hear everyone's thoughts! Go!

[Joe Colasuonno]

It depends on your risk tolerance and what level of rehab you are comfortable with, but you should be able to purchase property here at a true 12% cap rate if you are diligent and do your homework.

Putting down 60k into a 200k property at a 12% cap rate will yield you $2k per month in NOI and a mortgage payment of about $850. Cash on cash should be about $1150 per month, or $13,800 - a 23% cash on cash return.

Joe