After seeing my I Buy Houses flier in a local grocery store an owner of several properties that are currently rentals called me and asked if I would be interested in buying any of them. Some are sfh and others are 5 unit buildings. What info would I need to know before I can make a bid? More than likely I would keep them as rentals. I’ve driven by most of them and they are not in the best neighborhoods and probably need some repair work.
Would my maximum offer be one where the mortgage payment would be (at the most) 50% of what the rent income would be? How does necessary repair costs effect my bid?
Any help you can provide me would be really appreciated. I thought I’d ask before I spent too much time checking into these properties. Thanks for your help!!!
Well basically you need to have cashflow. Remember there are several basis tips people use just to see if the deal makes sense…Does the house rent for 1% of the ERV…example…100K house get 1K a month rent…
You need to know your area prices…Figure out the estimated monthly payment, taxes, insurance, maintance fees, estimate vacancies, utilities if you have to pay them, advertising expenses to get a tennant (check local paper for prices). Ask seller for his P&L statements for last 2-5yrs depending on how long they have owned unit. IF they give a rent credit to tennant for certain jobs they do on the property, it should be included on statement since they consider it an expense.
Also why are they selling…How much equity will you have in the home…lots of questions and all need answers…the list goes on and on…