Please Help Analyze For Newer Investor.....
I am looking at purchasing SFRs in Alabama from a bird dog.....is it better to puchase one home at a time as a new investor or lets say 5 so they are leveraged in case one is vacant, requires repairs, etc? Each home is costing between 48k - 54k. Also, if the sellers appraisal (prior to rehab) was done last month, how concerned should I be that I will be losing money before closing by November 30?? If I plan on renting and holding does it matter as long as the properties cash flow? Thank you!!
If you are new to this I think it is better to start with one. You do not want to overwhelm yourself. And unless this is your full time job managing 5 rehab projects at the same time will be a monumental feat in frustration even if you do all the work yourself.
WIth the way the market is now I think it is best to look for cashflow as appreciation is rather unpredictable these days. I have seen house prices in some developments fall 10% over what they were just last month.
If the appraiser is not one you hired then consider the appraisal off. Frankly I only trust appraisers that I have vetted and who can thoroughly explain the appraisal to me. There are too many instances where a seller can get the appraiser to strive for a certain figure, not that this is necessarly the case here.
Calculate the cashfow carefully - have you setasides for maintenance, taxes, insurance, mortgage, maybe utilities, pest and other services, income tax, management fee - even if you do it yourself? Have you planned for vacancy? Do you know how you will cover the expenses during vacancy?
Think it all over carefully and make a plan. It is harder to go off course when you have a well thoughout plan that you can adjust as you require.
Good Luck!!