Dilemma deciding if this is a good deal or not!

[Sidney Johnson]

Hello BP community! 

I'm stuck in a dilemma trying to decide if this is a good deal or not, and should I go through with the purchase.

I came across a property that is for sale for 50K, the city has it accessed at $46,500 and after a few counter offers back and forth we're currently at $45,500. The house currently has a tenant in there now and the rent will be $550 a month.  Do you guys think this a good deal?

[Michael Boyer]

Sidney, it would be harder to tell just on the price and rent.. The more info you have, the better analysis you can do. For example, just for starters...look at a few forums where people have analyzed buy and hold deals to see the process. You could start by running the mortgage calculator in the tools bar (add your local taxes and insurance, maybe call your assessor or look up your mill rate online; call a local agent for a quote or just for a rough estimate).. Then also look at the rental property calculator and all the factors to figure in (vacancy, say 5-10 percent; repairs, reserves for capital items, management at 10 percent, etc)...... That 550 in rent, I am guessing, gets dissolved away quickly with the mortgage, insurance, taxes, and allocations for these other items, diminishing your returns..Also, see if that is market rent or if similar units in the area may go for a bit more (or less).. And think about your goals and strategy (to buy and hold or maybe fix up to increase rents or flip if it is a ugly duckling etc).. Get figures and run some numbers and maybe refine your strategy and see if you still want to do the deal......