I live in Seattle. After becoming a Mustachian convert I moved out of my Capitol Hill home to rent a condo that’s two blocks from my office (and the beach!) in the small bedroom town of Edmonds. I pay $1595 in rent. I have a great tenant in my Capitol Hill house, and I'm netting $750 a month in rental income. I now have the opportunity to purchase my rental unit directly from the owner. I’d like to live in this unit for another 3-5 years. At that point, I’d like to rent out this unit and move to a slightly larger home.
I think this is a good investment. I'm buying it for under market value with no agent fees. The location is stellar with great potential. The HOA has $25K in the bank, and the board is active and savvy. The mortgage payment will be $120 less than my rent. And I already know how to rent out and manage another property. I'd like to dump my savings into paying this property off ASAP.
But please, tear it apart. Poke holes in it. What am I not seeing?
Market Value: $255,000
Original Purchase price: $243,000, no agent fees, seller covering all closing costs and loan origination fees (roughly $6K)
Original Mortgage Amount: $215,000
Interest Rate: 4.75% (This interest rate is high for reasons I won’t go into unless you really want to know…)
Mortgage Term: 30 years
Term remaining: 30 years
Amount remaining on mortgage: $218,700
Gross Rents: $1595 today. I predict this will go up in the future.
Principal and Interest (the P&I of your PITI - should match with the above info): $1141.20/ month
Taxes and Insurance (the T&I of your PITI): $149.96/ month
HOA costs: $179/ month
Deferred maintenance notes: None that I know of.
Anything else special or unique in regards to the numbers of the property (not the property itself; things such as city assessments, back taxes, special costs due to unique features of the property, etc. etc.):
Seattle traffic is getting worse and worse. There is one train line that runs north to south. While this condo is a long driving commute to downtown (1+ hour in traffic), it is 2 blocks from a train station on that one north to south line. The train will get you to the heart of Seattle’s booming tech start-up neighborhood in 20 minutes. I believe it will take very little time before this quiet beach town will be crawling with rich young renters who want an easy train commute. As it is now, rental units in downtown Edmonds get snatched up quickly.