Is This A Good Deal?......HELP
Hot market and I want to know if this is a good deal or not so I can move fast if it is. Condo came on the market yesterday. Here's the background:
Parents bought the condo 2 years ago expecting their daughter to go to school at this particular school which she just decided not to so now they have to sell. Rental market is hot, and vacancy rates are real low. I also went to school there so have some knowledge of where people want to live, this is one of them. It is currently rented, but not yet for next school year.
2 bed 2 bath = 4 students
Asking price 99,900k - purchased 2 years ago for 97k
Rent by the semester is 1,600 x 4 students x 2 semesters is 12,800 (school) yearly - vacant during summers more than likely
HOA fees = 250 per month - includes all maintenance inside and out, sewer etc...
Property taxes = 83 / month
And that's the story. First of all, is this a good deal, and secondly what is your opinion in purchasing condos to rent? On one hand the HOA fee seems high, but them I don't have the hassle of fixing things nor need as much of a rainy day fund. I was also thinking about doing an interest only 5/1 ARM to maximize cash flow for the first few years until I can build up a stronger financial base. Then I could refinance if I wanted. Any thoughts?
What are the expenses?
PITI.....the total expense amount?
After speaking with my mortgage broker, it was decided that I could get my monthly payments under 800 a month. This is assuming 5% down and a 5/1 interest only loan. Ball park monthly payment excluding utilities would be 750 a month - this would include the 250 condo fee and property taxes. Assuming this, it appears that there is 315 per month in cash flow.
- I'm checking to see who typically covers utilities in these condos, the owner or the renters.
Any thoughts?
One more thing, forgot to factor in insurance. Not quite sure what that would be a month.