All Forum Posts by: Account Closed

Thanks for the support. I grew up in King of Prussia but I live in Audubon now.

Thanks for all the responses and the support! I didn't think there would be anymore responses to this thread but I'm glad I came back and checked it.

Steve, sir, we might be neighbors. How lucky am I to have joined Bigger Pockets last week and have a top contributor who lives in the same town as me? Thanks for pointing out the expenses I left out and was off on in my analysis. I would love to hear more of your thoughts on the Norristown market or maybe the criteria you use to determine whether or not an area is good to buy in or has distressed properties and possibly getting back on track. Being new to investing in rentals and real estate in general, I basically chose what was closest to me and in my price range without any awareness of things such as taxes being on the rise. Are you a landlord with properties in our area? I'd like to pick your brain without being overly intrusive in the process.

-Andrew

The property is not currently rented. I actually found out it's a short sale today! I don't know how that changes things up but I have no problem with getting an addendum and waiting for the bank to get back to me on an offer. I was there today and chatted with the next door neighbor, very nice older fella in his 60's who knows all about the neighborhood with only positive things to say...although, six blocks down there is some crime. There are two houses in the neighborhood (3br/1ba) asking $1,250 for rent and I've been checking comps through a bunch of sites. I don't know what it would be appraised for now but from what I've gathered overall the same row houses in decent shape on the street are valued at 95k-115k.

Why? What are you selling? lol

Curt, thanks for the tip. It might come closer to 25-30% ROI with closing and updates. I guess after the first year it will be back up to 38%. I wondered if some average the first year ROI into the ROI for the duration of the rental or if they just exclude the closing and updating costs for the first year from the equation. I have my answer now though, it's all relative and should be averaged in.

Brent, I will certainly look into getting a private money loan but it's not something I'm familiar with. It would be nice to have more money left over after the down payment for updating and to balance out the cocr.

Nathan, I will be managing it myself so hopefully it will balance out. As for the cash on cash, I'm not optimistic about repairs being financed but hopefully I can get it lower than the asking price and it will justify some of the repair expenses even if it hurts the cash on cash percentage some. It's not exactly Philly though, it's Norristown where a 3br might go as low as $950 but most go for $1,150 or more.
Thanks for responding.

I planned on buying an owner occupied duplex as my first property but there simply aren't any deals in my marketplace for multifamily properties that I could cash flow once I move out. I've concluded that if I want a deal I'm going to have to buy a single family home and buy my first home later on, possibly after acquiring multiple rental properties. I know that I should look at hundreds of deals before choosing one but what if the tenth property I see is the real deal?

3br/1.5ba
Purchase price - $50,000 (listing price)
Down payment- $10,000
Mortgage payments- $2,580/yr (PI $215/m @5% 30yr)

Rental Income- $13,200/yr ($1,100/m)

Vacancy 10.1%- $1,333
Property tax- $3000/yr
Insurance- $800/yr
Maintenance- $1,200/yr
Utilities- $300/yr water
Advertising- $200/yr

Total operating expenses- $6,833
Net operating income- $6,367
Less mortgage payments- $2,580

Total cash flow- $3,787/yr or $315/m

Cash on cash return- $3,787/$10,000 = 38%

How accurate are the numbers? I have an adequate cash reserve of $12,500 or so after a down payment and can cover the mortgage without dipping into reserve if I had to. This house requires a few weekends of elbow grease with some minor updating in the bathrooms, carpet, paint, stain the cabinetry a lighter color, but I think It was updated before it sold for $125,000 in 2008. I also live about 5 mins from the property and have leftover appliances from my parents old house that I can put in there like a fridge and microwave. It's located in-between a middle school and a large park which, to me, makes it seem easy to rent to a young family long term. I'm eager to get my first property, do I look at 100 more or pounce on one before someone else does? I'm ready to make some mistakes and get some hands on lessons! Shall I make an offer and get an inspector in there before you do?

Welcome! I too am a new member who is looking to make their first deal and, lo and behold, I too am from the Philadelphia suburbs - King of Prussia. Best of luck.