Under Contract On First Investment Property

[Perry Rosenbloom]

Well, we are under contract on our first investment property! Actually, it's the second time we're under contract on our first investment property... Walked away after the inspection on one deal...

Anyway, here are the details:

4BR/2BA SFH in Greeley, CO
1600 SQ FT Ranch built in 1955
New AC, New Water Heater, Old Roof, 10 year old furnace that has been serviced every 6 months for the last 2 years
Mostly hardwood floors with a little carpet. Tiled kitchen and bathrooms
Kitchen is completely renovated

Under contract at 147,500
Taxes: 682/year
Projected Rent: 1,500/month (based on the responses I'm getting from Craigslist, I think we could probably even get 1,550-1,600).

I know that a lot of people here very much like the 40/50% rule. Other investors I've spoken with locally feel that's very conservative. Also, two family members own investment properties in Florida and Atlanta and haven't come close to those numbers... We'll see how it pans out for me :-)

Regardless, with the 40% rule, we're cash flowing roughly $2,200/year; however, considering I will have higher quality tenants at 1,500/month, the home is completely renovated, vacancy rates are less than 1% and the only major repair looming (fingers crossed) is the roof, I think it could be realistic to have our total operating expenses (including insurance and taxes) at roughly 25% gross rental income for the first few years, which should give a CAP of 9.11% and COC on 20.73%.

We'll see how naive I am ;-)

Wish me luck!!!

PS Special thanks to Grant P. for his recommendation of a real estate agent.