First Purchase - Rehabbed - Buy and Hold

[Shane Sigsbee]

Hello,

I'm new to the community but wanted to share my success story of my first home purchase.  My wife and I live in Las Vegas NV full time but we have a home in a small town of Alabama called Grand Bay (near the MS border, right outside Mobile).  We have a great network setup in that town (her dad is a GC, brother in law is a PM, and a huge network of potential tenants).  Cost of real estate is extremely low, cap rates are solid, but no real prospect of appreciation.  Anyways here was my first deal:

3 bed 1 bath house, 1088 square feet was listed at $49,000. We offered $36,000 and eventually settled at $38,500. I originally estimated $6,500 in repairs. I just finished the repairs and spent $8,600. After original closing costs I'm in the property for a total of $47,500. Based on comps in the area I think the house has an ARV of approximately $55,000. I have the house listed at $825/month and have had 2 showings so far (listed it 2 days ago). I used 7.5% vacancy, 5% repairs, 7.5% Capex (likely need a new roof in 4-6 years) and 0% property management (brother in law managing it for free). Annual property taxes are $345. Insurance is $33/month (liability only, I'm self insuring dwelling). Below numbers are based on it renting for $800/mo.

Cash on Cash ROI: 14.36%

Pro Forma Cap Rate: 12.40%

Monthly Cash Flow:  $568.25

Here are a few pictures.  We replaced a lot of rotting wood on the outside, redid the fence, repainted the entire outside and inside of the house, demo'd and redid the bathroom, and landscaped.