Rochester - South Wedge - 1st Purchase Feedback

[Alan Smith]

Hi All!

So I made it a goal to buy my first buy and hold in 2017 and established relationships early on with a realtor, PM, and a tax adviser. I ended up purchasing a property in the South Wedge (Rochester, NY) directly across from Highland Hospital and can be found here for reference.

I purchased at $75k with 20% down conventional resulting in a 60k mortgage. As an engineer by day I could have easily had analysis by paralysis. I relied on initial feedback and info and I obtained what I believed to be the worst case Pro Forma pre-purchase. 

Rent: $12,000

Mortgage: $3861

Taxes: $3280

Insurance (Replacement Cost): $698

PM: $1200

Maintenance/Capex: $1800

Vacancy: $1200

Cash Flow: -$39

Yes, I realize breaking even is not a good deal. That said, I believed the above to be a worst case (correct me if I'm wrong). I believe >$1000/month rent to be achievable and as a highly desirable location the vacancy and the maintenance costs will be less than forecasted. Additionally, I purchased primarily on adding long term value to the house and knowing its value is very unlikely to decrease. Its a 2 bed 1 bath currently but the 2nd floor could be finished into a 3rd bedroom or bonus room by injecting future capital to increase rents and/or refinancing in a BRRR manner.

The last 3 months have been a learning experience for sure. PM did not work out as the 1-2 weeks of required maintenance was significantly delayed and 3 months out from closing the property remains vacant. I terminated the PM contract yesterday and will either dive into self management and/or explore other PM options. 

Let the criticism begin. Thanks! 

Alan