Rental Property #7 - Melbourne, FL

[Matt Leber]

Just closed on our 7th rental on 2-14-2020. The property is in Melbourne, FL. For the last year, I was having a hard time justifying market prices in our area and how thin the margins would be on properties I was analyzing. In January, I stumbled upon a For Sale by Owner in Melbourne, FL that was listed at $99K. This really caught my eye because its really rare to find properties in Central Florida under $130-150K that aren't in a terrible area or really bad shape. However, this property was in surprisingly good shape, with not much work needed other than an inside paint job. We offered $95K and the seller accepted. I was planning to list for $1200, so we were well above the 1% rule, which has worked well for us in the past. However, when I called the Brevard County Housing authority, they told me they would approve my rent for section 8 at closer to $1400! On top of this good news, I found a local credit union through a friend that offered us a 30-year fixed rate mortgage at a very low interest rate, 3.75%! When I ran my initial numbers to evaluate the deal, I ran them conservatively at 6%. So, this low rate approval was awesome news! In then end, we are listing our new property at $1375; and after setting aside 5% for vacancy, 5% repairs, $150 capex, and paying PITI, we will cash flow about $450 per month on this property. Over a year's time, that is above 15% cash on cash on our capital invested.