Philadelphia, PA · Member since 2014 · 13 posts · 3 votes
Long time reader, first time poster. I just bought two houses and fixed them and rented them out.. I would really appreciate anyone to chime I'm to see if I good deal or not and if my rents are good enough. I paid cash for both deals.
First house
Purchase Price - 27,990
Rehab cost - 8,000
Rent - 850
Second House
Purchase Price - 29,600
Rehab - 2,500
Rent - 775
Thanks for all input. This is in Philadelphia Area
Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
12y
The numbers by themselves look good, but this says nothing of the neighborhood, the quality of the tenants, the items on the property that still need to get fixed sometime in the future, etc.
Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
12y
The numbers by themselves look good, but this says nothing of the neighborhood, the quality of the tenants, the items on the property that still need to get fixed sometime in the future, etc.
Philadelphia, PA · Member since 2014 · 13 posts · 3 votes
12y
I thought the 2% was the only way to determine good ROR . I'm above 2% correct?? The taxes are about 850 a year for each house. Insurance is 80 bucks a month for each.. Why would Insurance and taxes factor in if the rent is 2% of purchase price..Everyone has to pay Insurance And taxes. I understand taxes can effect the rental if taxes is high..Trying to Learn dont want to sound pushy LOL.
Realtor · Schaumburg, IL · Member since 2011 · 289 posts · 118 votes
12y
J Cobb I think it's a good deal if for the area, the rent is a fair price and you understand who your tenants are and what it's going to take to manage them and the property.
I think it's a bad deal if you are renting this for $850 not knowing what your getting into.
Bottom line, I think you would be the best to tell us. If the fair market rent in this area is $850 then your spot on. Hopefully you purchased, rehabbed, and occupied in a timely manner to minimize cost as well as securing a qualified tenant for this area.
Remember, it's all about the net. Doesn't matter what you rent it for if you can't manage it or don't collect rent.
So my question to you, based on what you know of the area and other rentals, are you in the ball park?
I thought the 2% was the only way to determine good ROR . I'm above 2% correct?? The taxes are about 850 a year for each house. Insurance is 80 bucks a month for each.. Why would Insurance and taxes factor in if the rent is 2% of purchase price..Everyone has to pay Insurance And taxes. I understand taxes can effect the rental if taxes is high..Trying to Learn dont want to sound pushy LOL.
The 2% calculation definitely isn't the end-all-be-all of determining good returns. It's a great quick and dirty way to get a basic idea of how well something will work out but other expenses/calculations definitely have to be taken into consideration to get a better picture.
The numbers you give definitely look good like and since they meet the 2% rule there is a high chance that you will do well but its still possible to be a bad deal without all the numbers.
Lets take House 1 for example:
$35990 Rent Ready, Rented for $850 = 2.36% 50% rule = $425 to Tax, Ins, Maint, etc and $425 in your pocket which is great
Now lets say House 1 was in a trailer park or Co-op with lot rent or dues of $250 a month?
$35990 Rent Ready, Rented for $850 = 2.36% 50% rule = $425 to Tax, Ins, Maint, etc - $250 lot/dues and $175 in your pocket which still isn't bad.
Both examples meet the basic 2% rule but you can see how quickly the end results change when you factor in other things.
The rents in Philly do vary greatly depending on the area. I am assuming these are 3/1 houses. If you don't mind me asking, what area of the city are they in?
Investor · Madera, CA · Member since 2014 · 82 posts · 21 votes
12y
Jason Cobb unless there is unique like Chris K. mentioned the numbers look great. If the area or tenants are horrible you can expect high maintenance and repair costs. I would love to see those numbers on my rentals.
The rents in Philly do vary greatly depending on the area. I am assuming these are 3/1 houses. If you don't mind me asking, what area of the city are they in?
One is in Northeast Philadelphia like on the border of frankford and northeast philly. The other one is in Southwest Philadelphia Near about 7 blocks from Island Avenue.
Thanks Brandon, I am hoping they wont require high maintenance.
They didn't take long to fill. I put them on craigslist and people were beating down my phone so much i took the ad down. They gave me first ,last and security like it was nothing. They have been filled for two months now. I will be buying two more in December. Trying to buy at least 3 a year.
Congrats on the purchases. They look like solid investments. I looked at few places in North Philly that I would have purchased if I'd been local. Minor issues that would have added up contractor after contractor.
Your plan looks solid, I hope you renters are constant and paying on time!