First Rental Property!

[frugally]

Well it's not quite the deal I dreamed of when I started looking, but I think this is a solid base hit and will allow me to profitably get some damn experience.  It's under contract as of last night.  The stats:

Home:

• 3 Bedrooms - decent sizes
• 2 Bathrooms (there's really a third, but it's in the unfinished basement)
• No Garage
• Solid neighborhood with little-to-no crime
• List Price: $80,000 (this is also ARV)
• My Price: $73,500

Cash In:

• Down Payment (25% to get a 4.625% conventional loan): $18375
• Closing: $1400 (seller is paying an additional $1400 per the deal)
• Immediate Repairs: $2500 (parts of the roof looked to be in rough shape to me, the home is already licensed as a rental though so it's mostly rent-ready)
• Total Cash In: $22,275

Income/Expenses:

• Rent: $1000 - confirmed this is reasonable with my PM and a couple others.  Worst case scenario in my mind is $950 if it isn't renting...
• Mortgage (P+I): $283.42
• Taxes: $92
• Insurance: $55
• Vacancy: $83.33
• Repairs and CapEx: $150 - the house is small, and having no garage I think will keep the repairs + CapEx at 13%, but I don't want to make that assumption without advice...
• Management Fee: $75 - lease signing fee isn't included but I think I'm going to have us find the tenant.  We know the property manager well enough and will work it out.
• Cashflow: $261.25 ($3135/year)

Investment Numbers:

• Cash-on-cash: 14.07%
• Cap Rate: 8.44%

[SunshineGirl]

Nice. I especially think the fact that you bought in a solid neighborhood with little/no crime was smart.

[mooreprop]

Good work!  Nothing substitutes for real life experience.  You are on your way.

[escolegrove]

Congratulations! That is a great first house. You have to start somewhere. Every proceeding house we have bought has been much better than the next.

Have you thought about self management? We self manage 3 of our house are 3k miles away) and it has worked out really well. It has not been the horror story that you hear from many people. I love it because you
 *better control over your house and decisions
*keep all the money with pm costs

Especially if you are placing the tenant. Check out my website, it is new. It is about how to do it yourself.

[frugally]

We have thought about self-managing and have been on the fence.  Because the property management company we found is relatively cheap we decided to just do that for awhile and see if we liked it.  Because I'm counting the fee into my calculations I figure I can always do that as my keep-myself-occupied job in ER.  I'll check out your site, though, I've been very interested in property management and remote investing.

[frugally]

Or rather, I would check out your website if it were available. ;)

[jb_in_DC]

Congrats, Frugally!  These sound like great numbers.

How did you find this place?  MLS?  Had you been looking long?  Make a bunch of other offers?

I'm still in the searching phrase...stories like yours give me confidence.

[frugally]

It was the home's first day on the MLS.  Scheduled a showing for 5:30 PM and had an offer in by 10:00.  I've made one other written offer and a handful of verbals.  Most of the properties I've been looking at have been on the MLS.

[escolegrove]

We also find all of our houses on the mls.

[sdp]

sweet.  1000/month houses in my town sell for 100K more....

[arebelspy]

I think this is a solid base hit and will allow me to profitably get some damn experience.

Exactly what you need when starting out.  Well done.

[guzzler]

Did you find your first tenant?

[frugally]

Not yet.  Meeting with the property manager later this week to get it out there - we close on the 8th of September and I'm targeting to get everything ready by September 15th.