Would You Do Either Of These 2 Deals?
I just saw several 3 family houses this weekend in Connecticut. Two of them looked like possibilities. The numbers on the first 3 family house is: Selling Price: $190k Percent Down: 10% Mortgage: 30 year fixed at 6.5% Monthly Mortgage Payment: $1080 Monthly Property Tax: $388 Monthly Water & Sewer: $150 Monthly Insurance: $120 Monthly Heat: $200 Monthly Cost to Maintain LLC: $40 Total Monthly Cost: $1948 Total Monthly Rent: $2325 Total Monthly Profit: $377 The numbers on the second 3 family house is: Selling Price: $208k Percent Down: 10% Mortgage: 30 year fixed at 6.5% Monthly Mortgage Payment: $1183 Monthly Property Tax: $425 Monthly Water & Sewer: $150 Monthly Insurance: $120 Monthly Cost to Maintain LLC: $40 Total Monthly Cost: $1918 Total Monthly Rent: $2550 Total Monthly Profit: $632 Please keep in mind that if there is a vacancy, or something breaks, the profit numbers would surly go negative for the given month(s). Also, the first house sold 8 months ago for $159k, and the owner did not really put much into the house (sounds like a hefty flip). The second house was bought a year ago for $145K, but I don’t know how much work the owner put into it. I think that both houses would appraise without issue. The prices I indicated is what I think I can negotiate them down to, and not what they are currently selling for. Please let me know what you think (do these 2 deals make sense)?
Comments(0)
You need to figure some kind of vacancy rate and you also need to put some money into a repair fund. When you start doing that your first deal looks very slim if you need cash flow.
If your second deal is in a decent area it deserves a closer look. But only you can decide if it is right for you.
1st deal- NO
2nd deal-maybe
1st deal - NO
2nd deal - YES
Other than walking away, your options on the first deal are to increase rent, decrease price, or make the necessary changes to have the tenants pay their own heat. That may not be feasible, but you're in CT, not exactly a year-long summer state.
Good luck
How realistic are those rent numbers? They sound kinda high...