Toledo, OH Property Analysis

[Michael Temple]

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Here is a different deal that popped up this morning. So using some advice from my last analysis and comments I got back I increased my expenses for vacancy and lowered my assumptions about income growth to 1% as well as increasing my mortgage rate to 4.5%.

Pros

Nice part of town

Good school district

Turn key ready, start renting from day one no rehab or expensive borrowing of hard money.

Cons

No real discount from market value. It is pretty much worth what it is listed for.

A little dated inside, but since it will just be a rental and not a flip I am not too concerned with this.

No way to "recycle" my cash like I would do with a BRRRR deal. It will cost me about 14K from my reserves.

It seems that almost every property I put in the BP calculators for either BRRRR or rentals come back as OK, not terrible, not a "killer deal" just average.

This deal does cash flow, but not by the $200 which is my general target. The upside is I don't need the cash flow to live on so I can plow it back in along with cash from other rentals to pay it down. At 65K, I should be able to pay it off in 15 years with no problems maybe sooner at which time I would have much better cash flow for retirement, which is what I am really after. So my thought is do I take a "marginal" deal to get moving in the right direction or keep looking.

Now before someone comments and says I am trying to force a deal to get started this isn't entirely correct. Yes, I do want to add another house to my portfolio, but more importantly I know that real estate is a "get rich slowly" strategy. It takes time to really start making money. I have retirement set about 15 years from now so I need to get time on my side and the longer I wait the less of it I have to pick up assets and get them paid down before retirement.

So with all of that in mind, thoughts?

[Stone Jin]

@Fidelis O. I'm an out of state investor so in theory it would be in my best interest to use property management.  However because I have many systems in place for my rentals that I self manage locally I am attempting to self manage a few of them in Toledo.  I have a couple properties with a professional manager and he does okay.  Communication is a little lacking but responsive when I have to chase him down.  If you are planning on doing low rent rentals then I would use a property manager because the $70 a month is well worth it to not have to deal with the day to day stuff.  My rentals average $1600 a month rents so it's a much larger chunk by dollar not percent.  The reality is that if you buy a property and fix everything at the beginning and screen your tenants properly, you won't be receiving many calls and hopefully won't have to chase many tenants for rents.  

In terms of maintenance, out source only what you have to.  For example, roofing, hvac and electrical use a professional.  Paint and small plumbing repairs, try to do them yourself first to understand the process.  Once you understand then outsource them as well.  You need to be the back up to the pro for those items sometimes.