Any advice is these numbers work? Would you do it?

Have a house I am seeing tomorrow in a university area. It is a total rehab. Let’s say for sake of argument, that the rehab is of decent-good. It isn’t something that someone put a band-aid on.

Here are the numbers:
House Price: 99K
Down Payment: 10% Down
Taxes: $200/year
PMI/year = $890
PI/month = $580
Insurance/year = $550
Total Monthly Payment (PITI): $715
Rent: $1200-$1400/month
Comments: This is a strong rental market. Appreciation look favorable. Renters pay for all utilities but water at about $30-40/month.

My thoughts were to try to get down to $85K for the house price. In that sense, the monthly payments would be around $625/month (PITI).

However, I wanted to get everyone’s feedback at the original list price.

How much for repair costs?

Here’s how I see this deal:

Gross Rents: $1,200 per month
Operating Expenses: $600 per month
NOI: $600 per month

Mortgage ($99K, 30 yr, 8%) $726

Monthly LOSS: $126 OUCH!

With purchase price at $85,000 ($85K, 30 yr, 8%) $623

Monthly LOSS: $23

I would not do this deal at these prices.


Propertymanager, do you actually do propertymanagement or no?

You sure do know your stuff. Thanks for all the helpful info.

Hard to comment on the price, but here’s a few issues I see.

Your PI estimate is low; particular at 90% LTV. Probably more like $650-700 off the top of my head.

Sounds liek this might be a student rental? Students are hard on property and can be very demanding tenants.

The rent range you give is pretty wide which tell me know don’t know your market very well.

Your real cost to carry this property is probably well over $1000/mn figure in evaluate repairs, like turnover cost, etc, etc. (I would guess $1100-1200). Thus at $1200/mn is breakeven, $1400 you might make some money.

Not a clear winner in my book, but worth a further sniff.

In additiona to trying to get the price down (which I always do anyways), I would try to get a owner carry back of 10% at like 8 or 9% (institutional money is going to be much , much higher). That way you can get one loan at 80% LTV althought the 90% CLTV might push your rate up and exclude you from some programs.

I would offer 80k (try to get a counter in the 80’s) and ask for 10% carryback. I always offer for less than what I’m willing to pay.


Yes, I manage several dozen of my own rentals. Sorry, but I don’t know anyone in Austin.

Good Luck,


thanks anyway.

I aggree, always simple,sound advise I like it.