Help analyzing a rental house opportunity

[brkuhn1]

A friend and I are trying to get into the rental game and we have come across this opportunity. We have differing opinions on this so I was wondering if someone would be willing to double check my math on this scenario and give me some advice.

Purchase Price: 59,000
taxes: 900/year
New roof in 2013
New water heater 2012
Basement has potential for one room apartment with separate entrance. But currently is completely empty other than utilities.

Can finance 90% through a family member for 4.5% for 30 years. Payment would be 269/month

Houses in this area rent for $800-1000/month+utilities (still checking on this so lets just assume $800 to see if this works)

We both agree that the basement apartment would be able to be made rentable for $8,000. The apartment would be $400/month plus utilities.


I am really interested in what everyone has to say. Also as a side note it has been good that we ran into this deal because sitting down and working the numbers together has really opened my eyes to how different we were when it came to crunching numbers on rentals.

[golfer44]

Sounds decent, but how is the house structurally?

I think there's a lot more to rental properties than just the numbers (I'm guessing you'll cash flow about $130/mo before you do the basement). But will the house fall apart after a few years? How is the area (war zone)? A 60k almost turn-key house isn't always a crown jewel, but I don't know your area.

[brkuhn1]

structurally the house is good. I am located in a small town(populatio around 2,500)wher $60,000 will buy you a decent place but they don't come up for sake very often. Until recently the only realtor in town had 3 houses available for sale.Also there ishardly any vacancy rate, most landlords here I have talked to said they have waiting lists for there properties.

[daverobev]

$70k for $1200 a month = $14.4k a year; certainly a good find, I'd say! Assuming all other things are good.