Author Topic: Is this a decent rental?  (Read 2949 times)


  • Handlebar Stache
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Is this a decent rental?
« on: February 28, 2015, 08:19:07 AM »
Looking to purchase a home that will also work as an investment in case plans change and I need or want to move.

Potential property:
1,000 sf, 2 bed/2 bath condo 
Small condo complex in a nice quiet area, pet friendly.
High owner occupant rate (90%), no one is currently delinquent on condo fees
Needs cosmetic updates ~ 10k

$60k purchase price - $20k down + $10k improvements = $50k financed @ 4% for 30 yrs
family financing, no buying closing costs

Financing - $239/mo, $2,868 yr
Property Taxes - $100/mo, $1,200 yr
Insurance - $33/mo, $400 yr
Condo fees - $200/mo, $2,400 yr
Maintenance - $33/mo, $400 yr (interior only, exterior covered by condo fees)
Vacancy (1 month) - $62/mo, $750 yr
Total - $667/mo, $8,004 yr

Rent for $750/mo, $9,000 yr (Realtor said $750-$800/mo, going with lower value)

When I plugged the numbers into the NY Times rent or buy calculator, it came back with a rental price of $684/mo, so buying appears better than renting, assuming the condo finances/reserves are in good shape (will investigate further). Not a stellar investment perhaps, but not horrible?

Any thoughts or advice?



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Re: Is this a decent rental?
« Reply #1 on: February 28, 2015, 09:12:11 AM »
I would not buy a condo for 70k (after repairs) that had $200/mo HOA and only rented for $750, personally.  You might do just better than break even, with a decent amount of hassles.  YMMV.  :)
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  • Guest
Re: Is this a decent rental?
« Reply #2 on: February 28, 2015, 12:53:34 PM »
Your numbers give a 5% yield on investment ($1k net income/$20k cash outlay), which would be tax free, plus a little equity build up.  I would look for something more than that in a rental.


  • Handlebar Stache
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Re: Is this a decent rental?
« Reply #3 on: February 28, 2015, 05:53:07 PM »
Without knowing anything else, the current numbers do not look impressive. If you are not optimistic about appreciation, it doesn't seem worth the time. I don't know the whole story, are there any other reasons for the purchase?

Dividend Youngster

  • 5 O'Clock Shadow
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Re: Is this a decent rental?
« Reply #4 on: February 28, 2015, 07:03:06 PM »
Insurance sounds a little low to me


  • Bristles
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Re: Is this a decent rental?
« Reply #5 on: February 28, 2015, 11:06:07 PM »
$1200 in taxes on a 60K condo? That's unreal.

Some of mine are as low as $310 for a condo (also worth about $60K).

Given that the 10+ year prospects for property appreciation aren't above inflation I can't see where you would make money. $100 a month for the hassle / risk of owning a place? No.

Offer $40k and pray.


  • Handlebar Stache
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Re: Is this a decent rental?
« Reply #6 on: March 01, 2015, 07:58:58 AM »
Thanks everyone!  Thought it might be a contender cause it met the 1% rule and was just over 50% rule, but the consensus is clearly "no". 

It was the first property with half decent numbers (on the surface) in a nice walkable location I would actually want to live...the other investment rental deals here are all in areas where I would never live or feel safe. 

Anyway, it went under contract last night for more than list price (not to me), so onwards in the search :)


  • 5 O'Clock Shadow
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Re: Is this a decent rental?
« Reply #7 on: March 02, 2015, 12:43:37 AM »
I would only buy a condo if it met the 2% rule.  Too many fee's!


  • Bristles
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Re: Is this a decent rental?
« Reply #8 on: March 02, 2015, 12:50:23 PM »
Even though this is a dead deal, it's worth mentioning that I wouldn't exclude exterior maintenance in my calculus for evaluating a rental thinking the HOA will cover it.  That works until... Special Assessment.


  • 5 O'Clock Shadow
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Re: Is this a decent rental?
« Reply #9 on: March 06, 2015, 08:50:27 AM »
General rule: Never buy a property that has HOA's or other fees that you do not control unless it is a unbelievable deal.... even then its questionable. They can easily be raised substantially without your consent instantly shooting a shotgun hole through your cashflow