Would you buy this buy and hold?

[Lina Bibikov]

Hello! We just put a new construction house on the market. I’m thinking of sending the listing to some buy and hold investors also. Before I send anyone anything I would want to know if a buy and hold investor would be interested? It doesn’t meet the 1% rule so I’m hesitant.

Danville KY mostly rental neighborhood in town

Price $149,500

New construction

3bed/2bath 1200sq ft

Market rent ?$1000?

Regardless I know it will sell, but since we are planning on building more, would this make sense to an investor.

[Patrick Britton]

Fortunately those who adhere to the 1% rule are idiots.

If it truly is brand new construction for $150,000 and could rent for $1000 a month, I would want to know a couple of additional pieces of information: estimated annual taxes and estimated annual insurance expenses. Also, are there any other significant expenses pertaining to rental properties in that part of the world?  For instance, or the registration or license fees or anything like that?  

New construction is very interesting because presumably, there will be no major capital expenditures required for at least 10, possibly even 15 years.

Truly though, that whole 1% rule of thumb is totally meaningless to anybody who knows what they're doing. 

So yes, while the 1% rule of thumb might not get met here, the gross amounts are totally irrelevant. All that matters is the net, after-expenses take-home cash. And the easiest way to cut into significant net income is with a major expense which again, probably won't happen with new construction for a few years. That is incredibly attractive even to me and I am in no mood to purchase real estate for the foreseeable future; too many unforeseen, costly and rage-fueling repairs.

If I were you, I would consider roofstock.com when it comes time to selling.