Good Deal? $60K Purchase Price, $40K Renovation, $115K ARV

[Garett Medlin]

I'm a newbie investor with the cash to put down 20% on a $150K property who's looking for my first rental property investment. Targeting SFHs with conventional 30-year fixed rate loans.

My realtor and I went to look at a place and we made a connection with the next door neighbor who's going to be selling his home within the next couple of months. He told us he was thinking he'd sell it for around $50-60K. He let us do a walk through and it definitely will need renovating, possibly more than I'd want to handle as a new investor, but there's nothing critically wrong with the foundation from what we could see. It is a very old home built in 1900. My realtor has a lot of experience in this type of thing and could guide me through the process.

My realtor's thoughts, after looking at comps, were that it'd need roughly $40K in repairs and could be worth around $115-120K after that, with a potential monthly rent of $1,100. I plugged in these rough numbers to the Rental Property Calculator here and the cash flow looked decent.

I'd be looking to get a line of credit for the renovation budget and then do a cash-out refinance after 6 months.

Renovation breakdown from realtor

• Garage - i would say put in anchor wall system and new membrane roof and new window altogether I'm thinking $4k
• You'll want to tear down the plaster walls in the rooms upstairs and put up drywall: $6k
• You'll probably want a new kitchen: $8k flooring appliances and cupboards
• Tear down of back garage and patio: $4k
• New flooring and paint throughout: $5k
• bringing things up to code: $8kish?
• Misc: $5k lighting, trim, doors etc

Let me know if I left out any critical details. It's my first time posting, so learning as I go. Appreciate any input!