I've been looking at buying my first rental for probably ~1 year, reading and learning a lot from you all! Tell me what you think about this property, it is having an open house tomorrow and I plan to take a look in person.
LP: 53k (Zillow estimate is 63k for what it's worth)
Target price: 45k, max price is 50k then I will definitely walk away. It looks like they have been trying to sell it since 2014 with various price changes and re-listings.
rehab budget: 5-8k (overall it looks decent and is liveable but the kitchen could use some minor refreshing)
2 bed/1 bath SFH, 1,104 SQFT (older home, outside looks cute with some older home charm, little porch etc)
built 1947
target rent price: 650-700/mo (area rent median on rentometer is 600; nearest craigslist postings are 700-900/mo for 2 bedrooms, zillow estimate is over 900, which I feel is way too high)
Insurance: 600/yr (based on what I pay for my house, which is slightly larger/nicer)
taxes: 920/yr
maintenance & management (self-manage): 200/mo
I also attached the analysis I ran on Good Mortgage, based on what I feel are pretty conservative numbers (higher final price & lower rent) but maybe I am wrong? Tell me! It doesn't account for vacancy, so the "cash flow" would be lower with a 10% vacancy. The cash flow would not be amazing but for a relatively small investment, I should net 100+/month and the property price is low enough I feel that I could pay it off entirely in a few years.
I would estimate this is a B- or C+ neighborhood, it's nearish to a smaller state university. Trulia has it as a "lowest" crime rate area but the homes are older. I will know more when I look around tomorrow. Rents are also lower on average than elsewhere in our area; where some one bedrooms can rent for 800/mo but the prices and taxes are also much, much higher in those areas.
I have enough liquid assets for a 20% down payment and rehab, with some buffer for emergencies. Another consideration is if I can get a loan for such a small amount but I figure I will cross that bridge when I come to it.
Here is your cue to tell me this is a horrible idea Waltworks :-)