Help me analyze this deal! Spanish Fork UT

[Jonathan Escobar]

View report

*This link comes directly from our calculators, based on information input by the member who posted.

So I am a college student about to get married looking for a house to live in. In Utah, it is really hard to find a deal that will cash flow, so I'm looking for a deal that will allow me to pay less than I am renting right now. I am currently paying $400 a month and married housing costs from $700-$1000. I would be decreasing my rent expense by a lot by buying this house that I would have someone co-sign with more for. 

I would have the tenants pay for electricity, and  water & sewer. Should I have them pay for garbage as well? I included $60 on my part for garbage since that's kind of a fixed cost that doesn't depend on how much tenants use it. 

Asking price was $229900 and this report has the number at $210000. Let me know what you guys think!! This is my first home buy. 

[Jaiden Olsen]

@Jonathan Escobar, Your plan, as stated, is hard to understand. So let me clarify to see if I'm understanding correctly.

You are wanting to find a place to live in Utah. You are currently renting for $400/month, and will likely be renting for $700-$1000 per month after you get married (congrats by the way). You found a potential deal. It looks like it will cost you about $300/month to rent it out, and you would still have to pay $700-$1000 to find another place to rent. Not to mention the expense of acquiring the property and tying up your capital.

If you use it as a rental, that won't solve the problem as to where you want to live after you get married, right? How would that decrease your rent expense? If you are looking to rent it right away, I'd tell you to look elsewhere for an investment, the numbers aren't great.

However, knowing the market in the Utah County area a little bit, that is a pretty cheap starter home and may be a great place for you and your wife to live. It might cost you $1,500/month, but it looks like you were planning on spending close to that anyway to rent it out and find another place to rent. If you were to buy it, at least a portion of your monthly expenses would go to paying off principal, and you can take advantage of the tax breaks for owning property, and market appreciation. According to the report, after 10-12 years, the numbers start to turn around and you could make a profit renting it out, but that is a long time to wait to see a decent return on your investment.

Overall, not a bad starter home in Utah County right now (but read Scott Trench's book "Set for Life" to make sure it meets his criteria). I'd definitely pass on this as an investment property.

Good Luck!