Would YOU buy this?

Question

This would be my first buy and hold so I'd love to hear your honest thoughts. Thanks!

3BR/1BA SFH in Inkster, MI

Price: $28000

Gross rent: $9000 ($750/mo)

P&I: $114/mo for 30 yr note or $172 for 15 yr note

Annual Debt Service: $1368 or $2064

Taxes: $1900

Insurance: $500

PM 10%: $810

Maintenance reserve: $900

Gross Annual Income: $9000

Operation expenses: $5010

NOI: $3990

Cashflow: $218.50

Cash on cash return: 41%

Cap rate: 14%

Fred Heller · Answer

I lived in the Detroit area for many years. Back in the day Inkster was a pretty sketchy area. Not sure what it's like now, but I suspect it hasn't improved much.

Nick Doria · Answer

@Brian Huber i have a friend that is an agent out of area that could help you find some better areas and has experience with investors i can pm his contact info to him

Brian Huber · Answer

Thanks everyone for your input! I think I'll hold off for a more stable area.

Jacob Sampson · Answer

From a strictly #'s perspective it looks like a god deal.  It doesn't suprise me that others say it is a bad area.  That sort of cash flow looks like bad area cash flow.

Stewart Beal · Answer

also I would charge 8% property management fee plus 50% of first months rent

Stewart Beal · Answer

I manage 2 single family homes in Inkster.  Both 3bdrm and I rent one for $925 and one for $975.  You maintenance projections are a little low because while the routine stuff is basic when you have to replace the furnace, the roof, it is going to raise your overall cost up a bit.

Nick Doria · Answer

@Lawrence Henkel III that was going to be another thing i was going to bring up. the area is pretty ruff like you said so if you are only looking for affordable cash flow and not expecting the value to go up very much then it might work out. If you're looking for an area that will go up in value i would look else where. it reminded me a lot of the southside of chicago while i was living in michigan and would visit a friend who lived in inkster.

@Brian Huber no worries just want to get a better understanding of where your thought process is.  If you haven't seen the building yourself or somebody you can really trust hasn't seen it i would pass because of the reason that lawrence brought up. If you or a person you trust has seen it and has a understanding of the area and the numbers work out how you want them to then i would go for it.

Brian Huber · Answer

@Nick Doria sorry for missing that. It's rent-ready. It would be about $500 for the city inspection and some basic cleaning.

Would YOU buy this?

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