Investment Property

[williell]

This Property is in Fort McMurray, I believe that I can rent each of the 4 rooms for $1000 a month, what do you think of this as an investment? Fort McMurray has a vacancy rate of less then 1%.

Price:
$529,900




Type:
Single Family
Style:
Bungalow
Title to Land:
Freehold
Property Size:
Under 0.5 Acres
Land Features:
Landscaped, Fenced
Access:

Heating:
Natural Gas
Garage Type:
None
Water:
Municipal
Sewer:
Municipal
Services:
Electricity, Telephone, Cable, Bus Service, Natural gas
Exterior:
Vinyl, Stone
Driveway:

Foundation:
Concrete
Features:
See Remarks
Roof:
Asphalt Shingle
Flooring:
Carpet, Laminate
Inclusions
Fridge, Stove, Dishwasher, Washer/Dryer.
Exclusions

Bedrooms:
3+1
Bathrooms:
2 \ 1
Rental Income:
NO
Age Of Dwelling:
1974
Sign:
Yes
RPR:
NO
Lockbox:
Yes
PCDS:
No
Road:

Letter of Compliance:
No
Garage:
No
Gar.Details:

Water Access:

Water:

 

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[Runum]

What do you want this property to do for you? Is this your first investment property? How much do you think you will have to put down? Property taxes? Insurance?:ears:

 

[williell]

I can put down 30k. This would be my first property, I think it is safe when concidering the low vacany rate in the city. The owner paid $2216 of taxes in 2008.

 

[sthompson01]

What do similar properties rent for? Did the previous owner rent it out? If so, rents? Expenses? Cash on cash return?

 

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[Runum]

I know location and market has a lot to do with the value of the property. However, I have to say, WOW, your first investment property that you are targeting is priced over a half million! Do you have the employment income or reserves to cover the mortgage if the rents don't? I would assume there are HOA dues and maintenance will be more expensive due to quality of the property. From your questions, you have a lot of homework to do.

 

[Runum]

OK, more relevant info. A $500,000 note at 6% for 30 years is almost $3000/month. Taxes are $200/month. I have no idea what insurance, maint, landscaping, and HOA are going to cost. At this point your known expenses are about $3200. Are you sure the HOA or city will allow you to lease rooms?

 

[MrPink]

If the general rule of 50 % of your rent goes to maintenance then this is NOT a good deal. I feel that with higher end homes this percentage could be reduced, but would not do this deal.

 

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[RealOG]

I can tell you from experience that renting four rooms is 4x the work. Plus, your fixtures (paint, carpet, drywall, appliances) will get worn out quickly.

Some hurdles for you - the bank wont allow you to count more than market rent for the house. So if you can rent out the rooms for $1000 a piece but market rents are 3200, they are only going to count the 3200.

If you live there (which I assume you are since your down payment is 30k) then it is easier to manage but the bank wont let you apply ANY rental income to your qualifications. Also, when renting out rooms the landlord/tenant laws are slightly different (in your favor).

Good luck!

 

[rcardin]

As an investment property most banks are asking 10-20% down. you would be looking at minimum 50k down. I would lower my sights a little more towards the 150k range and see what you can find there. It will be much easier to get financing on the lower end of the spectrum than the higher. Also no garage would be a deal buster for me unless it is a duplex.

 

[kwerner]

williell - why is it that you want to begin landlording in the first place? what are you looking to get out of it? what are your investing objectives?

i'm not trying to crush your idea or anythiing, but i think this group could help you better if you gave us a brief explanation of your objectives / plan / goals and what you're looking to accomplish.

:cheers:

 

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[williell]

What do similar properties rent for? Did the previous owner rent it out? If so, rents? Expenses? Cash on cash return?

In Fort McMurray rooms don't really go for less then $1000 and you can find people to fill all of them. I have to talk to the owner about the expenses. This was really a back of the envelop kind of idea, actually I wouldn't even call it that. A friend forwarded me this deal because for the year of the house, the shape it is in, and its size, it is well priced. New one bedroom apartments are selling for over 400,000 in Fort McMurray. I know I am bending over backwards to prove it to myself to be a good investment, 500,000 is a large amount of money, I don't think I will start a portfolio of rental properties with this home.

 

[williell]

You are right about having a garage too, especially in a place where it is so cold, and car thefts are frequent. I do lots of quading around McMurray in the summer, and I always find a truck thats been taken for a joy ride, abandoned, and then burnt in the bush.

 

[williell]

Seeing that the cashflow is negative, I am definetly going to kill this idea. I would like to stress that I wasn't saying I was 100% positive this was going to be my first property to invest in, I just got a tip about it and wanted to show it here first. Thanks for the link to REI Startup, I think I need to read more about real estate investing because It isn't something I understand. This group really helps me in getting a reality check for all of the ideas that I have, and all of the critisism is welcome. Thanks

+++ Reputation

 

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[Runum]

++++speed for you for taking the risk and posting it. Analyzing deals, whether we intend to buy them or not isone way for us to learn. The goal is, as you gain experience, not to waste too much time dwelling on bad deals and focusing on positive deals. Good luck in your hunt.:cheers:

 

[hatterasguy]

Not even running any numbers, just eye balling it I would have to say you need to get it for under $300k to make any decent money on cash flow @ $4k a month rent.

Unless they are desperate to sell I would pass.


This overpaying carzyness is what got a lot of people burned when the market crashed. In my area I still see properties like that with silly high asking prices. Unless you come in with all cash they make no sense.

Could you do a condo conversion on this property? If one bedroom apartments are selling for $400k as you say, than you could buy this thing for $500k, put whatever into it and sell it as 4 condo's on the backside for $1.6M. All of a sudden its not such a bad deal.