Another two deal, both SFR

General Real Estate Investing
1

Dear experts, here is another two deals, both houses.

#1
Downtown house, low income area, old community, bad schools
Asking 49,900

House 1400 ft (exclude garage), lot 6000 ft, 1925 build, 1970 update,
3 beds, 1 bath, 1 living, 1 dining, and a 2-car garage. close to bus and rail station. House is very old, although the owner claims little to repair. I think the windows need to replace in a few years. Roof ok, wall ok just look old.

Current rent $800 per month. Govt subsided at $600, a single mom with 3 kids pay $200. SHe is a nurse. She has been there 4 yrs. Tenant pays all utility.

#2, not great income but might have potential in appreciation
Mid-class area, mature community with great schools
Asking 84,900

House 1100 ft (exclude garage), lot 8000 ft, 1954 build, 3 beds, 2 baths. House is old with brick walls. Pain and Minor repair at $1500-2000 based on the home inspector. Looks OK.

Current no tenant. Local rent lowest seen is $1100 per month for similar home, and $1200 possible.

Please provide advise. I am going after both.

Thanks

2

Will each property cash flow at the price you are being asked to pay and the rent the market will bear? We can all make guesses based upon the information you have provided, but our guesses might be way off.

How much will each property cost you each month you don’t have a tenant in place? Until you know your overhead costs you don’t know what your cash flow will be. You need to do some more homework first.

If both properties will cash flow, and you are limiting yourself to just one of them, I would favor the tenant occupied home. The tenant has a job in an industry that is understaffed so she has job security. The house is already approved for public housing assistance so you know there are no serious health or safety issues with the house. And, she has a family so she will be unlikely to move in a year. She has been there for four years and will probably stay ten more and the housing authority will probably approve modest rent increases each year. There is a lot to be said for a property that cash flows AND won’t have a vacancy for quite a while.

3

Thank you, Dave.

I can afford both.

For the rented one.
Both house have similar insurance about $800 per year. Other than that, the tax is $980 a year. I might need some reserve for repair, whcih I need your best guess.

For the empty one.
Insurance about $800 per year. Tax is $1300 a year. I might also need some reserve for repair.

If not rented, the monthly cost will be MTG+ins+tax, I think.