Help for a total newbie

[djadziadax]

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]

https://forum.mrmoneymustache.com/real-estate-and-landlording/evaluating-a-rental-property/

-W

[Jon Bon]

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]

What do the flood maps say? It might be blue collar because of flooding.

[djadziadax]

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]

What do the flood maps say? It might be blue collar because of flooding.

No flood insurance required.

[djadziadax]

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]

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