Looking for your thoughts

[Andy Robison]

Here we go, after reading BP for a year and finally moving to a position that I can get together the funds to buy my first SFR home. I know BP has a love affair with MFR but I cant bring myself to buy one for my first purchase, the extremely conservative side of me just won’t let me do it. So I’ve gotten a list from my agent and I want to bounce some numbers off of everyone here.

First home is a 3 br 1 ba house in a C+/B- neighborhood asking
purchase price is 35,000
repairs high side 15,000
Total cash invested +closing 54,000 closing
20% down
30yr fixed rate mortage for 28,400
Taxes 786/yr (has gone up $2/yr for 3 years previous
new siding/roof/hvac
Estimated rent 800/month Little less than what everyone else is in the area but again I like to plan for the worse. I cant see this house renting for less than $800.

SO… if everything goes well. I’m thinking this.

800/month rent (low)
300/month for mortgage and taxes (high)
That’s $500 for everything else/month would this I’m not looking to make bank on this first house I’d just love not to try and fail within months. I know winter is coming up and I can afford to do the repairs and hold the home until the spring or after the holidays when I can get in a qualified renter. SO BP tell me what I’m missing. I’m still seeing 3k/yr using the 50% rule is not a bad return for my education for a long term buy and hold.

[Andy Robison]

@Steve Babiak 

 Sorry about the late response, its been a stupidly hetic month.
So far the house we purchased is amazing, tennants are great take care of the place and call me when problems happen. No big issues except over the past year I've had to go out twice for issues.
1) Power leg (?) On the power companies side went out. Only 120v appliances were working. All the 240 were dead in the water. They came out fixed it no problems
2) Main line clogged. Got a rotor rooter guy to come out and $90 later life was good.

Tennant will be comming up for lease renewal here in the next few months and they've told me they have no intention of moving.

Other than that we ran a gambit of trying to purchase a 6plex. Had great options 15% down 5year ARM Amortized over 30 years, for 95k with no PMI. Ended up seller had the property as backing for his other buisnesses and the bank wouldnt let him sell for what it was worth. Would have been a nice property fixed up and repaired and cash flowed very nicely at abour 4k/month following "50% rule." So we spent 3 months trying to work with that guy. Finally walked away we shouldnt have spent that much time but live and learn. Now we are working with our realtor and looking at purchasing two more SFH's. One will the a minor fix/rent, the other is a house that looks good and has a section 8 tennant in it. It will be a learning experience for section 8 for us and our test bed to see if we enjoy working with S8 or not.

Other than that this past year I've bought a house for myself outside of my buisness, an updown duplex close to a park that I just finished repairing the downstairs making liveable. The upstairs needs some tile work done in the bathroom, caulking done on tub, and carpet replaced. I've been putting this off due to medical bills and other expenses (life happens in bad times) However, I have decided that by april that this will be up and on the market, and the house should at least be cash flow positive by about $40/month once the upstairs is rented out. Not much but being able to put back an addtition $700 into debt pay down/savings would be amazing so I can go out and purchase another one house, this time just for me and the girl to live in. And keep this duplex just for cash flow. Once we move out will be looking at $150/door following that magic "50% rule".