Advice on newbie SFR Deal Analysis
Hi everyone,
I would like to get some insight on a possible deal, which would be my first.
I recently started looking more seriously into Real State to diversify were my money is and found this website which has been really helpful to learn about it.
Deal details:
House - Located in NE SA, near i-35 corridor. Built 1950, 1700sqft 3bed 2 bath in C Neighborhood (old town area, mostly working families but safe) The city has a household income of 60k and this neighborhood may be around 40k. The area is safe, mostly with old/immigrant people and significant number of properties being rented. School district is average/low, but not the worst.
Properties prices have stayed mostly flat last years because there has been quite a few development around with newer houses in the market.
House has been two weeks in market and price has been reduced once by 5k. Needs quite a few work.
My strategy is build and hold but looking to have a viable exit strategy in about 5-10 years max.
Here are the numbers:
Asking price - 80k
Closing & Remodel - 30k (roof has a leak, HVAC needs to be changed too)
ARV - 120k-125k based on Realtor Comp data
Rental - 1050$ based on Realtor Comp data
Vacancy + Property Management + Repairs + Capex (35% Rent) - 360$
Taxes and insurance - 217$
Mortgage (30yr-4%) - 302$
Cashflow - 171$
ROI - 4.47%
Considering above, and the risk on the area risk for exit strategy/future appreciation, the deal does not look very great so thinking of going this way:
- Offer 70k + Reduce rehab expenses to 20k which will give me 210$ cashflow and 5% ROI.
I still feel ROI may be a bit low but considering I want to diversify my money which is now all in stocks I would be willing to take on it.
Considering the low-mid growth potential for the area in the neighborhood is something you would consider?
Thanks for any advice!