Advice on potential investment needed

[Aleksandra U.]

Hello,

Looking to purchase a condo for investment. My last offer was $62500 and I'm paying closing costs (seller didn't not agree to cover any of it). Seller wants $65000. I still consider it a good deal even with purchase price of $65000. My realtor thinks it's not worth that much. I don't know what to do. Any advice?

I'm putting 20%. Closing costs around 4K. Tax on it $853. Insurance $300. HOA $300/monthly. I will have to take ARM 7/1 with 4.25% rate.

Charged Rent would be either $1000 or $1100/month. 

All utilites except electric are included in HOA fee. As well as general property maintenance.

Thank you for your thoughts.

al.

[Jeff Bridges]

The number one rule should be don't lose money.... You could cashflow for 4 years, but if you sell afterward and all comps in your same building haven't sold above 40k, you gain cashflow for those years minus the 22k loss you would take to sell the unit. I personally want multiple exit strategies for my rentals, so if I were to move or need to liquidate to get access to needed funds from selling the property, or in your case, your 7/1 adjustible rate mortgage maybe adjusted upward at year 7, I can do this and get my original investment back (at a minimum). There must be comps from other sales from other units in your building from recent history to guide you... We dont have enough facts to evaluate how much over market you would be paying for the privilege of rental cashflow.