4 SFH's In Mature Area As Rentals..
I'm looking seriously at 4 SFH's that are privately listed by the owner. He's a young guy that's getting transferred out of state and needs to do a 1031 exchange.
The purchase price per property is $180,000ish. There are tenants "with credit scores all above 680". Leases will expire end of May, end of August, end of October, and end of December... all 2005. Rents average $1300 (under market) with $1500 security deposit.
"2 miles from mall, 1.5 from interstate. Fully occupied. Roofs new, paint, carpet, and much more. Immaculate condition. Never vacant due to location. Rented under market, currently $5225/mo, market brings about $5700 on these homes. Rents could easily be brought up at end of lease terms. Owner bought in "hot area" and doesn't want to let them go but must, doing a 1031 exchange. All leases through at least May, turnkey investment opportunity. Call fast, nothing hardly ever available in this area with such an easy transition. "
I can squeeze together 10% down, which will get my payments to the point were I'm squeaking by based on conservative numbers.
I'm a long term guy, but don't want to be foolish enough to pass up rapid cash flow.
Based on VERY conservative numbers, I'm coming up with a first year after tax cash flow of $3874. For $730,000, is that enough? What other creative options are there for greater positive cash flow?
My thinking is diversify these properties (as greater appreciation potential) with other properties with better cash flow in the near future. What are your thoughts?
Buying something for 180k that rents for 1300 or even $1500 is pretty darn tight if you ask me. I wouldn't buy something that rents for 1% of the value, meaning, even if it rented for $1800 a month for a cost of $180k, too tight for me, but I hold longterm. I'd be interested to see your conservative numbers that has you cashflowing these over $300 a month. Even though you have tenants on leases, I would still budget at least 5% vacancies, at least 5% repairs, lawn if applicable, insect spraying if applicable, etc.
I didn't see you mention the market value, what is the market value of these places? If you are getting them for 20% below value it might make sense to flip them.