Approaching First Rental Purchase

[Jeremy Hoffman]

Hello BiggerPockets,

My name is Jeremy, I am from the Pittsburgh, Pa. Area. The following post will be in regards to a property that I have analyzed for purchase and feedback would be greatly appreciated.

The house: Asking Price: $54,900---- 768 Sq ft/ 1bed/2 bath, New furnace, hot water tank, new kitchen appliances, newer washer and dryer, newer roof, newer AC unit, anticipating no major expenses within the next year

Link to house-http://www.realtor.com/realestateandhomes-detail/4127-Lebanon-Church-Rd_West-Mifflin_PA_15122_M32818-38813

The Plan of action: The current owner is in a rush to sell,(friends of the family) most likely will sell for mid 40s, Place and offer for 40K hoping to settle for house between 45k-50k including all closing cost.

Area- Average house rents for $650-$850 for 2bed 1 bath. I will be updating the current basement into a master suit with updated bathroom.Which would put me into the $750s for rent. The current area has good location for city workers/ local business.

Estimated rehab cost 10K. I have ran the 50% rule with this property after the remodel and the numbers are as follows:

Purchase price $60,000(including remodel)

20% Down-$12,000

Rent- $750

Mortgage-not including taxes and insurance- $260/month

Approx insurance yearly: $800/12=$70

Approx Taxes yearly: $1900/12=$160

Total monthly Expenses: $260+$70+$160=$490

$750 rent - $490= $260

$260 x 12 months= $3,120 / $12,000 Down payment= 26% return in one year with no problems/ maintenance.... Even if you cut this in half I feel at $130 cash-flow a month for this property is good. If you look in the link the pictures are helpful determining the house. Beautiful backyard, shed, new driveway.

If you could provide and tips/ feed back, it would be very helpful.

Thanks in advance,

Jeremy