Should I Buy this Rental Property?

[Chris C]

I have the cash for a 20% downpayment.

This would be my first property. I currently have a great deal on a rental that I plan on staying in.

I'm not sure if this would be a good investment or not.

What do you guys think?

https://www.loopnet.com/Listing/3470-Littlestown-Pike-Westminster-MD/14203393/

A couple of things I noticed:

1. It's been on the market for 244 days. There's a reason why, I just don't know what it is.
2. It was sold in Feb 2018 for $150K, now listed at $250K. It doesn't seem like it's undergone major renovations

[Papa bear]

First, before I look any further into this thing, it’s a 3 unit. You will need 25% down to purchase. 

Second: what are the expected monthly rents?  I HATE cap rates for residential property.  It’s terribly inconsistent on what they use for income and expenses.   So basically it’s impossible to take the cap rate and get to cash flow.  Do the calc yourself starting at the top (revenue) and work down.

I’ll look more later when I have time.


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[Papa bear]

Ok. I looked at the listing closer.  2150/month in 2017 is the numbers given.  The market value is closer to what they last sold in February 2018. 

It has a well, septic, oil heat, shitty garage, which is all some major maintenance issues.
 No interior pictures usually is a problem, it will probably need updating.

Taxes are high compared to rents, you will have a lot of your rent eaten up there.

Get it for 180k and get rents to 850/unit and you’re starting to look better. 

As it sits, hard no.  Low ball offer if you really want the place.   Like 150k.


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[Chris C]

Great! Thanks for the advice.