All Forum Posts by: Vic Vega

@Account Closed Ok I see you mean the actual final closing price and not the current asking price. So you're saying it's pointless to run numbers to try and determine a possible worthwhile rental property based on a price you may potentially pay for it?

@Account Closed I'm not sure what you mean by the house doesn't have a sale price? Is $104,000 not the sale price?

@Account Closed The NOI and asking price aren't made up. They're accurate numbers on a property currently on the market. The price is just slightly under market value (compared to comps) at $104,900. It's not a single family home.

Yes, rent is $1250-1350. All numbers were pulled from comps. Home's generally sell for $105,000ish.

@Account Closed do you have any solid input/perspective to provide? 8.7% make sense for my area in comparison to others in the area.

@Account Closed I'm saying the cap rate on the rental property I'm considering is 8.7% which makes sense as being a property to consider.

@Peter MacKercher taxes, insurance etc. was included in the mortgage total. Add 15% for vacancy/maintenance, about $187-202, so that drops my cash flow down to about $400-500. I plan to self manage at least to start, if I use a third party that will drop cash flow down to about $275-350.

Hey Guys and Gals!

So I'm looking to purchase my first piece of investment real estate. Originally I wanted to flip but now becoming more interested in buy hold rent. I typically only look at distressed foreclosed properties. However, I've come across a home that is a standard sale. It's been moderately updated, nothing super fancy just clean and good shape ready to rent immediately.

Asking price is $104.9k which just about market value maybe a few thousand bucks under at most. I'd prefer to get it at $94.9 - $99.9k. The numbers (to me) make complete sense still.

Say I get it at $99.9k, put 20% down so $20k out of pocket to get in there. Mortgage would be around $650 give or take and should rent between $1,250-1,350. Generating $600-700 monthly cashflow. Given all that the cap rate math certainly makes sense. 

I just have a hard time getting over buying a investment property so close to market value. Granted it is in very good shape and a turn key rental though. Should I be concerned?

@Garrett M. thanks for the feedback. Now do you utilize the BRRR strategy ongoing, or simply just a fews times to build up some capital then allow yourself to tie up capital in rentals longterm?

I was also wondering if some people like to have a certain amount of capital before they start tying up money long term in rentals. A gentleman I spoke to a while back said when first started it was flipping only to build enough capital to allow himself to start tying money up in rentals.

Personally I have 100k in cash which certainly is enough to tie some up in a rental. However, I'm a business owner and due to new Government regulation, we'll likely begin executing an exit strategy about 12-18 months from now. So I'll likely need some capital to start a new venture, possibly.

Understood and all good points. 

Kind of like what you're talking about @JD Martin. Say you initially wanted to flip a home and needed to get it at 100k to make your required 30k profit in the end. But the bank is firm on 118k, so at this point it is no longer a worthwhile flip. So you scrap the flip idea and instead you decide you're okay with accepting the current bank price and take it for 118k to then buy hold and rent. Now with this you will likely make 30k and potentially much more in the long term.

So overall and in general would you say it makes sense to pay a little more for buy hold purchase compared to a buy flip purchase?