First Rental Property

[Daniel Jarzynski]

While looking for a quadplex to purchase with my VA loan, I found a SFH that feels like it may be a good opportunity. I was set on buying a multi-family property so I could house hack, but the price point of this SFH would actually allow me to use conventional financing, and continue looking for a multi-family with the VA (primary residence) loan. This will be my first investment property, so I'm trying to get as many opinions as possible. Is the CoCROI return good enough? Is the low price/low return worth the effort? Anything I'm missing in my numbers? Any tips, advice, etc. Thank you all in advance for any input!

Brief Description of the property: 2 bed, 1 bath, built in 1923 (updated electrical and plumbing). This house is basically a failed flip, and the owners seem desperate to sell, probably to pacy back loans. It was sold for $25,000 4 months ago and completely rehabbed: new metal roof, new appliances, new cabinets, new counter tops, new flooring, new carpet, fresh paint. It was originally listed for $82,500 3 weeks ago. The price already dropped twice, to $73,900. After viewing the property, today, the listing agent reached out to my realtor to inform her that the owners are willing to accept an offer $10,000 below asking price. We never discussed the price with the listing agent and/or owner, so their desperation makes me think they'll go even lower I''m thinking we can submit an offer for $60,500). Now the bad stuff. It's in an C neighborhood, and located about 75 yards away from non-profit organization which gives food to the homeless, and has 4-6 people living on the corner at all times. I'm worried this might scare away renters, and possibly buyers when I choose to sell. The neighborhood has also had an annual appreciation rate of 2.4% since 2000.

Numbers:

Purchase Price: $60,500 (12,100 down + ~2,000 closing costs)

Monthly Rent: $750

Mortgage: $231 @4%

Taxes: $58 

Insurance: Unknown - I will have to wait till Monday to start getting quotes. I used $60 to run my numbers for now

Vacancy: 10% - will most likely be lower as turnovers in the city are very quick

Maintenance and CapEx: $150 (10% + 10%) - this house has brand new appliances, new roof, and the owners had the water heater and HVAC inspected with no issues.

Rent - Expenses = $176/mo

CoCROI = 15%