How this deal look like - Pls Advice 1st Deal

[Keerthi A.]

Area - Chicago NW Suburbs

16 Miles from my place.

2Bed/1Bath Apt

Looks Clean, Move-in Ready

Bid Price - 38,500

Asking Price - 35,000

Offer Accepted by Fannie Mae Today.

Previous Sale prices are around 40-45K avg. Zestimate - 62K

Potential Rent - $950-$1000

HOA - 280/Month

Tax - 950/yr

Tax+HOA - $360

Vacancy - $80

Maintainance - $25

Total Expenses - $465

Net Return - $485-$535

There is a six month HOA bill that I got to negotiate. Will know only tomorrow what that would be. Hoping it is 1500 max.

Inspection and Attorney would be 150 and 400-500 respectively.

If I can get the place for 41K is it worth it?

[Tom Goans]

@Keerthi A.,

There is no mention of the target market study. My method for investing and researching begins with knowing and thoroughly understanding the target market. The way I view investing, the target market is the cash flow or buyer. Without a the target market, the rest is just numbers on a page.

• So many times I have read in this blog of people buying a property, spending money to fix it up, and then discover they cannot find renters or buyers. NO CASH FLOW. Many cannot determine why.

I would caution about one subject you mentioned in your post; negotiating the HOA debt. Consider this; the HOA is your business partner that will always be a part of your investment until you no longer own the property. Do you think it is wise to begin your relationship with the HOA and all the other community members by not paying the full amount of the debt owed?

Everyone else had to pay their full fair share. Why not you? If you do not pay the full amount owed without hesitation, the other members may feel cheated by you.

You may want to begin the relationship on a positive note by walking in with a payment in full check, smile, and promise that this will not happen again as long as you are the owner of the property. This begins the relationship on a positive note. The delinquent debt is an associated cost of the investment.

• What goes around, comes around.