Good deal for rental?

Rehabbing, Fix and Flip, Rental Properties
1

This is a 1200sq ft 3/1/1 fsbo single family house in Garland (average area). Talked to the owner who owes 45k. Repairs needed are paint, carpet, possibly tile she said, and the garage is currently setup as a bedroom (possibly converting back to garage??? not sure…)

Purchase price: 45k + 5k repairs
Mortgage: $366/month (50k @ 8% Do I need to figure closing costs in here also???)
Rents in the area: 850-1000 (need to do a little more research to narrow down the rent rate, but I was thinking of rent for $925)

2

Also, median ARV seems to be at about 75k…

3

ballgum - are you sure about the 5k repairs? Can you paint, change carpet, do some tile work, and covert a garage back for $5k?

Your mortgage also looks high - are you sure you can’t get a better rate than 8%?

This looks like a very good deal. Good luck!

4

Well after talking to other investors, they seem to think that in the area a 4br instead of a garage with 3br would be better anyway. I haven’t actually seen the place yet so there will most likely be more repairs I’m thinking. Paint/carpet shouldnt be a big deal. I can paint myself. Carpet, not sure…never done. Tiling I can do myself if I need to.

As far as financing, to be honest I’m not sure about what my rate would be. The plan would be to get conventional financing.

BUT, I’m not sure I will be able to get the $925/month for rent that I would NEED for $100/month cash flow. Well, after down payment, it would be…But just using the 50% rule without down payment, cash flowing $100/month I think will be cutting it somewhat close. I was debating on a rental or just wholesaling it depending on how the place looks…

5

You have a pretty good deal - but remember Garland has rental home inspections. I’ve heard that is an annoyance to many investors

6

Ok, so I need help in determining if this is still a good deal or not. I just got home from looking at the house. It needs more repairs than what the lady told me (I figured…). It will need:

  • paint/carpet through the house
  • possibly new linoleum or tile in kitchen and bathroom if the current cant be cleaned.
  • possibly updated or painted kitchen countertops/cabinets
  • new bath tub (or possibly cleaned somehow??) / bath tub wrapping against the wall
  • about 3-5 new doors
  • need to repair or replace the backyard fence (its falling over and destroyed in some areas)
  • some of the walls/sheetrock has holes in it and needs to be patched/fixed.
  • some of the sheetrock has large holes and will need new pieces to cover it up and fix it.
  • some of the ceilings had water damage marks BUT the owner said after the put up a new roof in 2002 it stopped leaking.
  • new kitchen stove

So this seems mostly cosmetic, but I need help in determining how much it will cost to make these repairs because it’s very close. Here are the numbers again:

price: 45k (also they owe 4 months of mortgage payments, about 2k)
repairs: 5k? If I do the work myself?
rental comps in the area: 900/month

7

one potential red flag is your estimated rent. I think $925 is quite high. Make sure you double check that.

8

In my area, once the bank starts the foreclosure process, this can add up to $6,000 or $7,000 for attorneys fees that have to be paid.