Hi All,
I need some advice!
I was just curious about how much housing buy/rent was close to work and was perusing Zillow. There is a little house (~950sqft) for sale near my place of work, about 4 miles! For $40K....that's right $40K (this is northern ME so keep that in mind) and I'm considering the possibility of buying it. I haven't seen it yet but have an appointment. I can tell from the pictures that it is super clean...the realtor confirmed my suspicions that it is an estate sale. Its been under contract twice, one person was trying to buy it remotely from Afganistan or someplace like that, and another person was a student, very young, who backed out with no explanation. Anyway, it does need the roof done and was told that it wouldn't get financed unless it was done - however, I would pay cash. Roof= 5K tops. I think I'd be inclined, IF it had no other bad problems to offer $35K and see what happens...I can imagine they might be getting anxious to have it sold before winter with the very bad roof.
Why would I want to do this??? Well it's super cheap and near work - I currently commute 30miles each way. We are staying put until she graduates HS this year plus it will take time to get our current home ready for sale. I don’t want to stay in Maine forever so I'm not looking at this as our forever home, but while she is in college we will stay and such a place would be adequate. Until we relocated, it would be easy to keep it rented due to all the college students. I would probably try to do it through word of mouth since I work here. I'd rather have older grad students. Also, there are a lot of property management services here due to large number of absentee landlords, services for plowing, emergencies etc that are very reasonable should one opt to use one.
The idea here is that I'd already have a place lined up should we move and a possibly pretty good investment if we did not. I would also then be able to reassess my retirement investment strategy when my current house sells (worth 3x what the new little house costs) since I would not have to buy or rent anything.
My back of the napkin numbers, estimated monthly:
Tax= 133
Ins= 40
Heat/water= 100
Mgt/plowing, etc = 100
Rent= 950-1100
Cash flow= 575-725
Return= 17-20%
What do you think? It seems like under my ideal scenario there is a really good margin of safety in the rental income for any unplanned repairs/renovations (I am told there is a attic space next to the two little cave like bedrooms that could be converted into a much larger master bedroom). And I have a lot of cash sitting about...even if I paid cash I'd still have a good EF on hand and I have already paid off my main home so I feel pretty secure about our current financial situation. I will still be able to fill a Roth and max out my 403b.
Thanks for any thoughts negative or otherwise! I don't have anyone close that is smart about this stuff and I really like having folks to hash it out with. I've never thought of doing this before so the idea is a little intimidating but very interesting!
Thanks for any input.