Offer accepted on first deal (SFR), good deal?
SFR:
Listing Price - $45,000
Accepted Offer - $39,900
Rent: $650-700 (Conservative estimate) ($800-850 aggressive)
Running the numbers, I've assumed the conservative rent estimate of $650 for the area, 7.5% for vacancy, as well as a conservative estimate of 10% for maintenance as well as 10% for cap-ex, for a total of 20% put aside for upkeep (the place is approximately 80 years old so I know maintenance will be a real thing).
The area is decent and low crime, although only being a couple miles away and "up the hill" from a D+/C- type neighborhood allowed me to get the place at a decent price.
The numbers I've run has my monthly passive income in the range of $75-125, depending on a few factors I won't know for certain until I own the property.
I know that's not the magic number of $200 monthly per side/SFR. However, the low barrier for entry, and the fact that I should have the place completely paid in full within 12-15 months were the deciding factors.
I know that paying it off in full will potentially lower the ROI, even though it will improve the monthly cash flow, as well as "waste" money I could be using as down payment on future properties. However, my personal plan is to have 2-4 properties in this price range fully paid off in the next 3-5 years, cash-flowing, and serving as a "baseline" of sorts before I start getting heavily invested and leveraged.
Opinions...thoughts?
Thank you.
Most Popular Reply
Great strategy. I had a friend that did the same. Bought multi-family dwellings and paid off the mortgages within 7 years and had cash flow like crazy. After about 10 years he had a $100,000 a year income after taxes for as long as he held onto the properties. However, after the 10th year he sold off his first property, owner finance and purchased another property and did that over the next 20 years. A total built in retirement plan.