I have a new build in Ocala, FL for $245K with a non-refundable deposit of 10% that was signed in October 2021. 3/2, 1357 square feet, 2-car garage. It’s expected to be ready to close in December 2022. The model looks like this, please check this link. Notice the asking price for the new ones is around $265K - $270K, more than mine. I can’t imagine anyone that would buy at that price at today’s rates.

Rents are expected to be $1650 - $1750. Insurance is around $700/year. Taxes, should be around $4K/year.

I started shopping for rates in early September, and then I was getting mid 6s. As I kept shopping around until now (October 2022), I am getting 7s, 8s, and now some as high as 9.5% for fixed rate 30-year DSCR loans. I am not eligible for a QM loan. I fear this will only get worse in the coming weeks.

By my calculations using 9.25%, 4% vacancy / repairs monthly, 10% property management, I’d be negative cash flowing at least $300 per month, and that’s after 25% down, not 20%. These are with the 5-year prepayment penalty too.

I already own one home built and managed by this same builder and am very happy with it. They are built and managed well, so that’s one plus. I don’t expect much difficulty in the way of renting it, dealing with repairs, etc. And the appreciation has been and should be decent going forward. 

I am at a loss as for what to do. Bridge loan? Interest only loan? Turn it into a short-term rental? Buy it, then sell it just to break even? Just tough out the next couple of years and refinance? Negotiate with the builder? 

I am happy to share my spreadsheet too.

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*This link comes directly from our calculators, based on information input by the member who posted.