Author Topic: Help for a total newbie  (Read 311 times)

djadziadax

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Help for a total newbie
« on: February 24, 2021, 08:53:34 AM »
Hi Mustachians,

I have been thinking about land lording for some time but have concluded that in our area there is nothing that comes to the 1% rule (as I understand it, the rest must be minimum of 1% of the purchase price).

But a friend of mine who is a realtor told me about  a small community nearby (1.5 hrs away) that still has condos for sale that fall close within that rule and I was immediately intrigued.

This property came online with a tenant in place paying $1400(but got quickly snatched)
https://www.williampitt.com/agents/jules/search/real-estate-sales/330-savin-avenue-25-west-haven-ct-06516-170374245-40014397/

But this one is available in the same complex

https://www.compass.com/listing/350-savin-avenue-unit-42-west-haven-ct-06516/644166664264698609/

It is walking distance to the beach, area is blue color to lower middle class. Realtor says can be easily rented for $1400...

Opinions? Risky?

I have read a lot of your posts on here but still need a fresh perspective on these particular units.

waltworks

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Jon Bon

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Re: Help for a total newbie
« Reply #2 on: February 24, 2021, 11:41:06 AM »
Taxes?
HOA?
Special Assessment!?

Generally condos suck for rentals (where I live). Possible that they are good where you are, but that feels unlikely.

Also this is small potatoes. Like I get it, we all start somewhere but the furnace on that condo will cost the same as a furnace on a 400k house you know? So a medium sized repair might wipe you out for a year.

Its not bad, but you need to give us more info. Would I buy it with what you told me? No.

If Condos make the 1% rule im pretty sure you can find a house, duplex, building that might as well. I would keep looking.

mozar

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Re: Help for a total newbie
« Reply #3 on: February 24, 2021, 12:45:41 PM »
What do the flood maps say? It might be blue collar because of flooding.

djadziadax

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Re: Help for a total newbie
« Reply #4 on: February 24, 2021, 12:57:23 PM »
https://forum.mrmoneymustache.com/real-estate-and-landlording/evaluating-a-rental-property/

-W

Thank you, that post was super helpful, especially the spreadsheet. I filled it out and it turns out "profit" will be around 1% a year on that property after accounting for all annual costs and vacancy. I will make a lot more in the leaving the money in the market.

One question - what is "Variable Cost PM" at 10% a year on this sheet?

https://docs.google.com/spreadsheets/d/10XGrJTyn-xDbPulj9t3STtshNd3Clx-2Ck1XQbLwd0w/edit#gid=2117251242

djadziadax

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Re: Help for a total newbie
« Reply #5 on: February 24, 2021, 12:57:58 PM »
What do the flood maps say? It might be blue collar because of flooding.

No flood insurance required.

djadziadax

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Re: Help for a total newbie
« Reply #6 on: February 24, 2021, 01:01:04 PM »
Taxes?
HOA?
Special Assessment!?

Generally condos suck for rentals (where I live). Possible that they are good where you are, but that feels unlikely.

Also this is small potatoes. Like I get it, we all start somewhere but the furnace on that condo will cost the same as a furnace on a 400k house you know? So a medium sized repair might wipe you out for a year.

Its not bad, but you need to give us more info. Would I buy it with what you told me? No.

If Condos make the 1% rule im pretty sure you can find a house, duplex, building that might as well. I would keep looking.

Your gut feeling was right! I used the info in this https://forum.mrmoneymustache.com/real-estate-and-landlording/evaluating-a-rental-property/ to figure out 1% a year of profit will probably not be worth it.






mozar

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Re: Help for a total newbie
« Reply #7 on: February 24, 2021, 06:37:00 PM »
Quote
No flood insurance required.

FYI for the future current flood insurance models are being updated. I would also ask around if people experience flooding in that area.

https://www.npr.org/2021/02/22/966428165/a-looming-disaster-new-data-reveal-where-flood-damage-is-an-existential-threat