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 

[Alan Smith]

Thanks for the feedback @Mike Cumbie. I've been in the shadows on BP and listening to the Podcast for 2+ years now. Figured there's no better way to learn than to jump in by making a purchase. I over relied on others input to this purchase and will approach things differently the next time I pull the trigger. 

The comment of the night when I met with another PM yesterday was, "You're taking this very well." in regards to how much capital it would take to make it the premium property I desire and the realistic rent this property would pull in its current state. He was a lot more detailed in his pro forma and the long term maintenance the property will require. Might meet with another person or two to get an overall assessment on the property's capability and go from there. 

Alan