Potential Home Purchase

[Bret Blackburn]

So this could be my 3rd rental property purchase, but first since joining BP.  I'm may be going through a little Analysis Paralysis.  The previous owner said he had tenants paying $1195/mo. I've requested any proof of that. In the meantime, I'm using $1100 for rent. I'm curious what you guys think.  The home is older and needs some TLC and some foundation work.  I have not received the estimate for that yet.  My 2 previous buys were newer homes, so this is new to me 

[Bret Blackburn]

I will be managing myself, but added in Mgmt cost anyhow

[Matt Lefebvre]

If this were a turnkey investment, the numbers seem decent.  However, if you have to invest money up-front to fix the foundation and do some of the other repairs/updates, you should really be calculating your cash-on-cash return.  If your initial investment is $24,000 + a few thousand in closing costs and you're making $2,844 in free cash flow, you have a pretty solid 10% return.  However, if you need to invest $10K, $15K, or more to deal with larger issues (I have no idea what the scope of those would be) then you're looking at a significantly lower return and might want to look at negotiating a lower price.

[Bret Blackburn]

That is one thing that concerned me with the repairs needed. I was going to use the option period to work the price down after the inspection if needed