Advice on a Rental Property

[Eric Gross]

My fiancé and I just looked at a property tonight as our first potential rental property and are looking for advice on whether or not it would pose as a good deal.

It is a single family home. The property is listed at $72,500 and we are looking to come it at $60-65,000. For the neighborhood we would get around $900 for rent. So our monthly income on the property is $900. After Expenses (mortgage, taxes, insurance, vacancy, repairs, cap ex, and property management), we would be cash flowing $107 monthly, and annually $1284.

It is located in a "C" neighborhood and the comps are pretty spot on. We are certain the rental demand in the area is high right now, and the city is trying to grow but we are unsure where it may land in the coming years and if it will stick.

The house has new stainless steel appliances, a new hot water heater and furnace, new windows, new cabinets and flooring. However, the house is only 950sq ft. (average for the neighborhood), there no garage and the school district isn't the greatest. We would also have to purchase a new washer and dryer set, as well as some small fixes that the owner tried to fix but clearly didn't do a clean job (caulking, trim work, flooring transitions, etc.) The backyard is sloped  straight down hill and we are also unsure of the age of the roof.

We will be doing an FHA and having to live there the first year, and it is currently a hike from both of our jobs and reliable sitters and just our every day lives. - We are trying to factor this in as well, as we could be losing money for the year we are there.

Any advice is completely welcome and thank you in advance!

[James Wise]

Originally posted by @Eric Gross:

My fiancé and I just looked at a property tonight as our first potential rental property and are looking for advice on whether or not it would pose as a good deal.

It is a single family home. The property is listed at $72,500 and we are looking to come it at $60-65,000. For the neighborhood we would get around $900 for rent. So our monthly income on the property is $900. After Expenses (mortgage, taxes, insurance, vacancy, repairs, cap ex, and property management), we would be cash flowing $107 monthly, and annually $1284.

It is located in a "C" neighborhood and the comps are pretty spot on. We are certain the rental demand in the area is high right now, and the city is trying to grow but we are unsure where it may land in the coming years and if it will stick.

The house has new stainless steel appliances, a new hot water heater and furnace, new windows, new cabinets and flooring. However, the house is only 950sq ft. (average for the neighborhood), there no garage and the school district isn't the greatest. We would also have to purchase a new washer and dryer set, as well as some small fixes that the owner tried to fix but clearly didn't do a clean job (caulking, trim work, flooring transitions, etc.) The backyard is sloped  straight down hill and we are also unsure of the age of the roof.

We will be doing an FHA and having to live there the first year, and it is currently a hike from both of our jobs and reliable sitters and just our every day lives. - We are trying to factor this in as well, as we could be losing money for the year we are there.

Any advice is completely welcome and thank you in advance!

 You would not be "loosing money" for the year you are living there. You are people, people's largest expense is the roof over their head my man. You gotta live somewhere. 

Seems like a pretty good deal to me. I don't know what your expecting for such a nominal amount of money but this house is priced correctly according to the comps, has a new hot water heater, new furnace, new windows, new appliances, & will cash flow after you move out. On top of all that you are putting down like $2,500? C'mon bro, buy that sucker & get back to work so you can start saving for property number 2 in 2019.

The 1st home I purchased was when I was 21 years old working at Radioshack making around $30,000 per year. The house sounds pretty similar to yours. FHA loan, similar size & price was $85,500. I lived there for several years. My mortgage is like $670 per month. Today I've got some tenants in there paying $1,050/mo & I run a $50M+ rental portfolio. Don't over analyze small decisions. Residential mortgages are the best debt you can have, your cash out lay is almost zero. As I said before pull the trigger & get ready to gear up for the 2nd one.