Author Topic: Is this a good buy ? (new to real estate investing)  (Read 2621 times)

WorkingOnIt

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Is this a good buy ? (new to real estate investing)
« on: April 11, 2014, 05:27:52 PM »
Hi All,

I've been reading a lot in the last few months, trying to consider if we want to get into the rental / landlord business.

A friend of mine is a real estate agent and has called about a short sale home coming on the market. We'd talked about wanting to look at things and this popped up.

I've seen the calculators - so I'll work on that too .. but to me I don't see this as a good deal ?
-The price is expected to be about $240k.
-It needs about 10-15K for some repairs/ get ready work
-The Comps are about $258  in the area
-Rent about $2K
-Taxes and insurance about 750/month

We plan to take a loan for this (likely) so there will be closing costs also ...

To me this seems to add up to just buying a house that has been on the market for awhile and paying about fair market value. I don't see a "deal" here, or a good investment ?

I should add, it is in a good neighborhood, this price point of home stays on the market for less than a week and gets multiple offers....and this is in Austin (as the other thread discusses).

Any thoughts or guidance would be well appreciated !


Kierun

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Re: Is this a good buy ? (new to real estate investing)
« Reply #1 on: April 11, 2014, 05:58:55 PM »
I do not think it to be a good deal nor a good investment property. 

arebelspy

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Re: Is this a good buy ? (new to real estate investing)
« Reply #2 on: April 11, 2014, 08:51:57 PM »
Sounds fairly mediocre.  You're buying at retail (market price) for a meh property (under the 1% rule, and Texas has some other things that will affect expenses like high insurance numbers).  Unless you think a market is poised for growth and the whole thing is overvalued, paying market price off the MLS is not a good way to acquire houses (and if it is, be picky anyways about which one(s) you choose, since you'll have plenty to choose from).
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Blindsquirrel

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Re: Is this a good buy ? (new to real estate investing)
« Reply #3 on: April 13, 2014, 07:42:18 AM »
  No, that is not a good deal. The ROI is very poor. If I were to blow 240K on RE I would want $4500-5000 a month or better for gross rents. Check out the link for examples of much better deals.  The deal we have in motion now is purchase 33k, rehab costs 9.8K, rent $1100-1200/month. http://www.mrmoneymustache.com/forum/real-estate-and-landlording/examples-of-rentals-you-own-that-perform-well-financially/

thesinecure

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Re: Is this a good buy ? (new to real estate investing)
« Reply #4 on: April 16, 2014, 04:01:43 PM »
  No, that is not a good deal. The ROI is very poor. If I were to blow 240K on RE I would want $4500-5000 a month or better for gross rents. Check out the link for examples of much better deals.  The deal we have in motion now is purchase 33k, rehab costs 9.8K, rent $1100-1200/month. http://www.mrmoneymustache.com/forum/real-estate-and-landlording/examples-of-rentals-you-own-that-perform-well-financially/

what state is this in, if you don't mind sharing?

i'm in houston, i doubt i could even find a livable (or fixable for that matter) house for $33k, much less one that would rent for $1k a month

either i'm looking in the wrong places of town, or this market doesn't sustain that sort of return (which is what my experience so far is telling me)

Blindsquirrel

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Re: Is this a good buy ? (new to real estate investing)
« Reply #5 on: April 16, 2014, 06:41:21 PM »
    State is Ohio and it is a house that needs some work in a burb outside of a major city. Not in a war zone at all. Different markets have different returns. Such a yield would be very hard to find in many Tx markets, NYC, SF etc. Nor do I think it will last, prices will rise or the supply of rental homes will increase or a combo of the two. If I felt like working houses in a war zone, you can rent a 10K house for 6-700 a month.