First time investor...please help me analzye this singlefamily

[Cassie Villela]

Single family, 3/2 with optional 4th room in garage. No repairs absolutely needed, but a few bucks spent on paint and a new garage door would improve curb appeal dramatically (home is nice inside, super ugly from the street).

Offer price: $117,000

Comps: $130-140k 

FMR: $1,050-$1,100

Financing: Putting 25% down, would get around 4.8% interest rate according to broker. Would spend about $1000 cash on minor cosmetic improvements.

San Antonio, TX market (crazy seller's market now, lowest inventory in decades, etc.)

RE investing goals: Build portfolio that will provide cashflow and flexibility with low risk.

We're in the situation where we don't quite have the cash on hand to find distressed properties/sellers, but we have enough cash/good credit to get financing easily and at good rates.  With the market in SA, it seems very difficult to find great deals. We don't want to make a bad investment, but we also don't want to sit around on our savings and lose $ to inflation, lose the opportunity at low interest rates, or watch the SA market appreciate even more without being in it.

What do you think? Thanks for your help!

[Rob Rice]

Hey Cassie,  I want to first say congratulations for getting started.  I'm not in the San Antonio area however, numbers don't lie.  You said the house is worth between 130K-140K.  You also said that you would be getting about 4.8% ACCORDING TO THE BROKER...BIG WORD...BROKER.

You said that the offer price is 117K.  You said that its 25% down.

That means that your willing to pay $29,250 upfront for a 4.8% return, along with the $1000 dollars in repairs.

I don't know if you have done this or not, but please talk someone who does these type of deals in your area. Go to a REIA, and download some of the information on BP. It has tons of tools and resources. The fact that you are even considering this makes me think that your money would be better spent getting a mentor, or purchasing some good education about buying homes as rentals for a good return. Talk to some people who do these type of deals and partner with them, either as a money partner, or in exchange for footwork. $29K is a lot of money to spend on a deal that you are not sure about. It should be a no brainer, that way you won't have to worry about it not working out.

Thanks for the tip about the San Antonio market.  I will do a mailing there to find good deals to wholesale. 

Best of luck. 

Rob.