Was first deal a deal?

[Benjamin Palasek]

Hello BP members. I've been waiting for the right single family property for my first investment purchase for awhile now. I finally pulled the trigger on one last week. The seller has accepted my offer of 78K on a 3bed 2.5bath home in Grand Rapids, MI. This home was listed for 90K. Comps are about 105k. Home is centrally located in a up and coming area. Close to farmers market, colleges, and etc.. I put 20% down. Closing costs are about 4K repairs are about 4K. Here are my expense's:

$183 property taxes

$55 Insurance

$340 mortgage

$84 Repairs

$120 Management

$85 cap expenditures

$120 Vacancy Rate

So $987 every month in expenses. Houses around here rent for 1200-1400 a month. Is $213 a month is cash flow good? Seems like my ROI is at about 6%

[Vance McClenton]

I'd say it was a pretty good first deal. You have a cash flow over $200/month which is a pretty good target for properties in Grand Rapids, and you have instant equity of around 25% (if this house is worth a little over $100k).

I might advise that after a year or so, once you've "stabilized" the asset, you could refinance and pull out your 20% down payment, which would make your overall ROI sky rocket!

Good job!