I am a baby at RE, this would be my first property.
There is a property for 85,000 2 unit total rent is 1200 plus $165 for a garage. The numbers sound good but the lady who rents the first floor also rents the second floor. She has 3 handicap children and she’s been there for 3 years and doesnt plan on moving. She gives her Social security check straight to the landlord now. But I’m always looking at the what if…?
So I’m not sure if this would be good as my first property
What would any of you do or can advise me to do?
(This is my first posting, I just found this site this morning and I already in love with it ;D
Hi K S,
I always use a rule of thumb that the monthly rent for a property should be about 1 percent of the value of the property. There are several things that will change this ratio including the overall price of the property and the condition of the property. The property that you found has about rents of 1.5 percent of value, so it seems like a good deal, but you need to make sure that it really is. If you are going to need to do $40,000 in repairs and upgrades, then it is going to be marginal. Also, the older a property is, the more you need to plan to spend on repairs. They will typically run 10-25 percent of rents, but may be more if you are not careful. I’m not trying to scare you away from buying this property, I’m just saying that you need to make sure that things are as they seem.