First Deal Analysis Double Check

[Donald Brinkley]

I converted my previous primary residence into a rental when I moved in 2015 and it worked out great. Now I’m looking for my first property to be a rental from the get go. Hoping I can get a double check on my analysis. I’ve found a condo on the HUD listing that needs some work (which I can do, and enjoy doing, myself) that I think I can get for 122k. Based on comps I expect an ARV of 170k and rehab costs are estimated at 15k. I plan to rent it for 1500 per month. For financing, I’m going to put 25% down on a conventional loan at 4.5% with the plan of holding the property for a while. I’ve also thought about maybe a HML for the purchase and then doing a redo, but to be honest my ignorance of that process makes me a little leery to do that. All said and done I’m looking at cash flow of $290 per month after factoring the loan, HOA, taxes, property insurance, and vacancy. I know this breaks the 70% rule (coming in at 80%) so it it still worth doing? Any and all thoughts on the deal and or pointing out things I could have forgotten to factor in too would be great.