I have been reading on this forum for about a year now just soaking up all of the valuable information. Now i’m looking to purchase my first property, which by chance used to be the house i rented and is currently rented by my brother. The property is technically a 2 bedroom 3 bath but really has 3 bedrooms (bedroom downstairs doesn’t have the closet directly in room it is connected between the room and bathroom, kinda weird and hard to explain, sorry.) I’m not trying to say its worth more because of that just that you can rent it as 3 bedroom if need to.
here is the deal, new furnace, newer roof, new dishwasher, older stove, hardwood floors throughout, except for one room with dark brown carpet. so minimizing risk on taking hit up front with something going out (elec stoves aren’t that expensive to find, new/used). I know there are some issues with the 2 showers as the doors leak and also need some cocking around the base of the units. that would be my major worry about how much rot is under there, but for the sake of this thread lets say i inspect it and it comes out ok.
Are there any other things as far as appliances, etc i should look for as potential problems?
now here are the details. asking 77,500 for it and i know it has rented for the past 2+ years at 725 a month going through a rental company that takes 10%. taxes per year are $1,361.24. the current owner bought it in 1989 for 37,500 (i know this doesn’t really matter, but i try to always check what they paid and when to see if the property has turned over frequently, etc. (does anyone else do this?)). the property is located inbetween the real estate office (in front of house) and condos behind and around the property. so the area isn’t decripped or low income or anything.
i know ppl are reading this and saying whoa whoa whoa, and i know i’m a newbie but not stupid. My question is what price do i need to get this for to make it a good deal cause as it stands right now its not even close. and i learn best by having a deal that pertains to me as opposed to the other peoples i’ve read about.
Other information, in Ohio, North central (wooster, in case property manager is near me, haha) Even selling this house to a family i don’t think its worth 77,500. I’m thinking that i would need to get this for a lot lot less to make it worth it.
what other things am i missing here? I know insurance is one but have never looked into it so not sure how to factor it in. Mortgage i know but that is going to depend on what i can purchase it for and thats what i’m asking. also most of the time i come by a formula i try to copy and paste it into word document and save it for future reference, but all of the ones i have are for rehabbing. what is the 50% formula and how to use it correctly. if i could buy this property for 60k would it be a good deal? what is the highest offer i should even think about making?
say purchase for 60k = mortgage with insurance circa $500
- prop manager fees of $72.5 = 572.50
725-572.5= 152.50 cash flow a month.
I know i’m forgetting something!!! Renters pay all utilities
thanks in advance to everyone, i really enjoy reading these forums and appreciate the time and help everyone puts into it and i’m looking forward to getting started investing and land lording in the near future.