Help me analyze deal in Mcallen, Texas!

[Lauren Garcia]

Hi! Newbie here. 

I am 24 and am in my option period of a three bedroom house in Mcallen, Texas. This is my first time investing and I want to make sure this is not a horrible deal. 

The house was built in 2001 and is a three bedroom, two bathroom. It was on the market for 132,000.00 and I made an offer for 128,000.00 which they accepted. I also negotiated for them to pay for 1500 of my closing costs, include all appliances, and include a home warranty for the first year. I had a termite inspection done and a home inspection and everything came back clean except for a few minor things (dented dryer duct.. ect). I asked for the seller to credit another 500$ to pay for the repairs to my closing costs. 

The house is in a nice neighbourhood in Mcallen ISD (which is a desirable school district) and the houses around it are maintained. 

I am required to put 10% down along with my closing costs. The house was a rental before and was renting for 1,100$ and my mortgage payment ( with taxes and insurance) is around 900$. I got a 4.3% interest rate on a thirty year loan. 

Am I missing anything?? Is there anything else I need to budget for? I have flood insurance accounted for and three months worth of rent saved for vacancy. 

I currently live in Vancouver, Canada but my Dad lives in Mcallen and will be taking care of the house for me. 

Any insight would be greatly appreciated! 

[Ryan Ingram]

Hey Lauren! 

Great job! From a long term perspective, it is really hard to go wrong in real estate when you're working with 30 year mortgages and you're in your twenties. 

I'd just make sure that you regularly set aside money for repairs and capital expenditures.

The monthly cash flow could be consumed with the CapEx.

I generally urge people to try and get to ten properties as quickly as possible. You're well ahead of the curve, so, great job. 

Personally, I noticed a huge difference after as my portfolio grew to over ten homes. It seems like the law of large numbers kicked in...and I was able to start using the monthly cash flow for any necessary repairs without infusing anymore of my own capital.