Yesterday I joined BP, and today I offered my first SFR -- thoughts?

[JT Spangler]

I made my first offer on an investment property today. It was an unusual one, but it's an unusual situation. A guy has been rehabbing this property near my old neighborhood (aka, in a neighborhood somewhere between blue collar and ghetto, call it a C area) in his spare time, and before he got finished it was vandalized. They broke all the glass in the doors and windows, stole the hot water heater, and the kitchen cabinets. Now he just wants out. I drove by it, both last night and this morning, and it doesn't need much to be a finished 2/1 cottage. I think 10k is a generous estimate to have it be a nice rental property (I just got done finishing out my garage as a recording studio, doing all work myself, so I think I have a decent understanding of the estimating here). He's asking for 40k and he owns it free and clear (I spoke to him on the phone today). House exterior is great, roof is new, electric and plumbing are new (he's a plumber by trade), and the foundation is in great shape.

I did some rental comps, and I think I could get 650/month for it if it was finished nicely, and maybe 700/month if I add central AC (which I'd definitely look at doing if the numbers work).

I offered him 17k, in cash, when I get back to town in January, and while he didn't accept it he also didn't hang up on me. He wants to check his records and see exactly how much he's got into it. But he knows that I need to have it rehabbed and rented for 30k max, with a 10k reno budget, meaning a max purchase price of 20k. He also knows I'm looking at another 2/1 slightly across town that's a bit bigger but listed for 25k. Really, his place is a good buy for me up to 25k purchase price, but if he wants cash I'm not sure I'd be able to come up with it in a month. If he and I can't agree on a price, I'll try to get the other place, which is open to owner financing.

I'll keep you guys posted, but regardless it was a pretty fun day for me. I'm excited to have a shot at a 2% SFR really soon, and even if I don't get either of these it's good to know the deals are still out there in my town if I hunt hard enough.