Deal analysis on a property handed down to me.

[Juan M Restrepo]

Hello Guys, My name is Juan Restrepo and I am a newbie real estate investor. I am trying to figure out what to do with a property that was handed down to me. My dad left to retire in Colombia. He left a SFH for me and my sister ( we are both on the deed). My sister has a house of her own and is struggling to pay it. I recommended a refinance so she can take her equity and I can take her out the deed and keep the house as a rental. That is one option the other one is selling the house since we have own it for more than 2 years and we will not be responsible for tax. I just wanted some advice to see if should keep it or sell it.

Here is the info: 

Location: 6360 Wilmington Way, Flowery Branch, Ga

Sale Price: $220,000 to 230,000 I got those values looking at the tax records of houses in my neighborhood that sold less than 4 months ago.  

1. Expenses in the month and yearly basis ( The new amount represents the amount after refinancing and I am the only on the deed). 
   1. New Loan: $719 with a 4.5% and a $142,000 total loan value.
   2. Property tax: $147
   3. Insurance: $135
   4. Cap Ex (5% or rent): $75
   5. Maintenance(5% of rent): $75
   6. Vacancy (5% of rent): $75
   7. Lawn Care: assign to the renters.
   8. HOA fees: $350 per year
2. Profit in the month and yearly basis
   1. Rent money: $1500
      1. I got his value using realtor estimate, rentometer and comparing comps.
   2. Average yearly appreciation: 9.8 % = $ 22,148 per year for 2018 for the 3 years before. 
3. Net profit without equity in month and yearly basis
   1. monthly basis : $274 , yearly: $2938
4. Net profit with equity in the yearly basis, mortgage payoff and tax depreciation.
   1. $2938 + $13,000 + 1068 + 8218 = $25464

• I did not include property  management fees.
• HVAC unit is 18 years old.
• I felt like I was not conservative with the maintenance, capex and vacancy expenses
• Does not meet 1 % rule is only .68%
• Does meet the 50% rule but I only have $ 31 free

Sorry about the long post. Do you guys have any advice you can give me? 

Thank you for help. 

[Joe Prillaman]

@Juan M Restrepo

Hey Juan,

If it was me I would sell the property. That would allow you to split the profits with your sister and have a good base for starting your investing career. We are at a very good point In the market cycle price wise to sell and that would give you a few months to get it ready for market. I would find the best realtor in your area on BP and get that ball rolling! Like you said you can save on the taxes and use that money to start your investing career with a clean slate. I would recommend picking up a copy of the boom Set For Life by Scott Trench at your local flee market and basically just do everything he says.

Best of luck - Joe