Hi folks,
What are there other factors to consider here?
What are some reasons you exclude a property from purchase?
Do you buy it necessarily because it has cash flow- at least $200 / month?
What reasons would you skip a home with cash flow?
(obviously really scary neighborhood) but what else? Major systems update? (electrical, furnace, roof? )
Cash flows on paper, but it’s a really old house that requires constant maintenance. $200 isn’t much when you’re doing $5000-$10000 in repairs and mtc.
The seller claims $200 in cash flow but won’t let you screen the current tenants or view rent rolls.
Even with good cash flow, I wouldn’t pay full retail. The rents could be on the decline in the market (like they are where I live), so when you get a vacancy, you won’t be able to demand the same rent anymore. This is pretty common in some areas.
In addition to #1, some things that I steer clear of in some cases would be really old energy wasting windows (that the deal doesn’t justify replacing), a roof that is good now but will need replaced in the next few years, or old mechanicals. Of course, if it cash flows and you can buy it cheaply enough, that’s ok.
those are four that I can think of, but there are probably more.
Thanks, Ohio Investor, this is exactly what I was looking for. I didn’t know to think about declining rents. That is helpful.
The house is 50-60 years old, solidly built, brick. No formal inspection.
Older neighborhood… near an airport, people (younger/airline staff) are moving in, albeit on a short term basis. I think the declining rents could well be a factor in my case.