Is the revenue enough?

[Sean B.]

After a harrowing battle with the bank to get a modification on a rental prop, they finally came through...Or did they? Bought the house as a flip that flopped in 08 and paid 260K. Current value is about 150k and it brings in $1900mth in rent. The bank modified the terms from 30 to 40 years at a locked 3.5%. The current mortgage + taxes are $1700 so there is about a $200 upside. Is the cash-flow enough to support this as a deal or not? Would love to hear some thoughts as my partner is ready to short sale the home as he thinks there are not enough funds for repairs when needed. I would love some advice or thoughts out there...

Thanks

[Michael Seeker]

It sounds like the property is probably assessed closer to 260K than to 150K. If that's the case, it'd be worth it for you to contact the county assessor and work on them to lower the assessment.

As @John Horner mentioned, you probably shouldn't be paying $4300/year for insurance either. In addition, your payment with escrow is about $1800, not $1700. You'll definitely be losing money on this place over the long haul. The first two things I would do would be to call the tax assessor and get my tax bill lowered, then call around to insurance companies and get insurance lowered. You'll have to insure it for $260K, but that should not run you $4300/year.