First Investment Property Deal Analysis - Nashville

[Ali Knox]

Hey everyone,

I have been listening to BP for about 6 months now , and am new to real estate investing. I have been eager to get involved in it for a while and think I might have found a deal that will work.

It is a 2 bedroom / 2 bath house outside of Nashville in Pleasant View. The market has not quite rose here like it has in other Nashville suburbs yet, but from my research and talking to other people I believe it will take off here soon. The details of the deal are below:

Purchase Price: $165k

Mortgage: $990

HOA: $100 / mo.

Capex: (figured based off roughly 1% of purchase price): $130 / mo.

Vacancy (figured roughly based off 5% of monthly rent): $70

Rent: $1400

Cash flow: $110

Another pro to this is that my family will be taking care of property management because they live in the area with several other properties around that they currently manager for free of charge (I will be responsible for capex costs, but day to day managing will primarily be done through them).

There is already a renter who is ready to take over the lease as soon as I close on the house as well. The property has been appraised at $190, but I am able to get a deal since it is through my family.

Any thoughts or opinions on this deal? Do the numbers look good, or is there anything I am forgetting?

Any advise is appreciated. Thanks!! 

[Dan Beaulieu]

Just another thought... Why not rent it out for one year, then when the lease expires, get the property in mint condition and sell it to a retail buyer? This way you enjoy a year of cash flow (if your numbers are actually what you predict), then 1031 exchange into something that cash flows better, like multifamily outside of Nashville.