We have 10 already - so I'm not a total newbie but still don't know everything either - but this one is different.
So far every property we bought we've gotten for very, very cheap, done massive renovations & paid cash. All of them are profitable.
This one is nicer than we've ever bought, has a long term tenant, super location and is in really good shape - nothing to do immediately. Sounds great, right? Two things that are not our norm: we would have to get a loan & the tenant is in there for below market and renewed their lease June 1.
This is all gonna seem really cheap to most on here but for my market, it's a little high on the asking & a lot low on the rent, but here goes:
Asking $80K. Tenant only paying $780/month. Terms of loan at my bank 6%. 15 year note payment w/ 20% down would be around $500/month. Leaving $280/month to pay taxes & insurance (might not even be enough to cover) = nothing for profit. My realtor is asking for the lease so we can see if the current landlord includes any of the bills or lawn care, if so, we would definitely be in the hole this year. We'll offer less but just trying to look at the worst case scenario and also figure out how low our offer should be to make this work.
The seller did himself a big disservice signing that new lease. Is it stupid to buy a rental property that doesn't make money in the very short term? We have just never had to service a loan and that cost is a killer for properties in this market where you have to make your money on the purchase since rents are fairly stagnant. That said, the rent on that house should be in the $950-1100 range if we did some small upgrades.
Thoughts? We don't have to have it but have always liked this house and figure it might be a good long term buy. Just wondering what I'm missing.
So far every property we bought we've gotten for very, very cheap, done massive renovations & paid cash. All of them are profitable.
This one is nicer than we've ever bought, has a long term tenant, super location and is in really good shape - nothing to do immediately. Sounds great, right? Two things that are not our norm: we would have to get a loan & the tenant is in there for below market and renewed their lease June 1.
This is all gonna seem really cheap to most on here but for my market, it's a little high on the asking & a lot low on the rent, but here goes:
Asking $80K. Tenant only paying $780/month. Terms of loan at my bank 6%. 15 year note payment w/ 20% down would be around $500/month. Leaving $280/month to pay taxes & insurance (might not even be enough to cover) = nothing for profit. My realtor is asking for the lease so we can see if the current landlord includes any of the bills or lawn care, if so, we would definitely be in the hole this year. We'll offer less but just trying to look at the worst case scenario and also figure out how low our offer should be to make this work.
The seller did himself a big disservice signing that new lease. Is it stupid to buy a rental property that doesn't make money in the very short term? We have just never had to service a loan and that cost is a killer for properties in this market where you have to make your money on the purchase since rents are fairly stagnant. That said, the rent on that house should be in the $950-1100 range if we did some small upgrades.
Thoughts? We don't have to have it but have always liked this house and figure it might be a good long term buy. Just wondering what I'm missing.