Small 2b/1br SFR, NW Indiana

[Jack Plantin]

Location: NW Indiana, greater Chicago area.

Asking price: 60k

Offer price: 55k

Loan amount: $41250 (25% down, 5.25 interest)

Expenses: $750 annual property tax, $900 annual insurance, 8% vacancy, 13% capex/repairs, self-managed for now.

Rent: Currently rented for $700 month to month, (tenant has been there 5 years, don't plan to increase rent right now), can be increased to 800/900 once cosmetic touch ups are done. Gas, electric is paid by tenant. Lawn care is done by tenant. Tenant reimburses landlord currently for W/S/G (sounds crazy to me, but it's in the lease according to agent)

Cash up front: $15750

Cash flow: $187 a month after expenses, 14.3% COC return, 8.75% cap rate.

Good deal or too risky in today's climate? This would be my first deal and the cash up front would take 2/3 of my savings.

[Ramon Flores]

@Jack Plantin

 I agree with @Daniel Guerra about finding out if the property is in a class C or D neighborhood. Since it is a SFH, I believe you will be putting down 20% down and not 25% down.

The deal looks good, however I would make sure the property is in good condition since you offered 5k less than the asking price. If it is not in good condition I would negotiate with the seller and bring down the price. Best of luck!