re: How did you buy your first RE

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Cash $50000 Yearly Ins 1000 Prop Tax 400 Long term tenants already in place $725/month Thoughts?

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Much depends on the value of the property. Is there a possibility of adding value? Some things to think about.

1. What is the property worth? If the property is worth 70K and your buying for 50K cash, makes it a much better deal. If it is worth 50K its not a deal.
2. At 50K I assume there is no chance for appreciation.
3. You need to include maintenance, vacancy, property management, cap ex, ect.


So another look. 725/mo x 12 months is 8700.
Subtract 1000 for property tax, 400 for Prop tax (I think this is low), maintenance (lawn, trash, water, ect..), property management 75/mo (figure it even if you plan to do it yourself. You may not want to forever), Cap Ex 50-100 month depending on condition of property.

Now your 8700 a year is more like 5-6K.

That's 10-12% return. I would rather make 8% in the market with zero effort.

Now if you can buy for 50K when its worth 70k. Add 15k in improvements and make it worth 90K. Increase rents to 900/mo and you are in a better position. You have 25k in equity plus monthly cash flow. You can refinance in a year and take all your money out and buy another property. Also can flip the property if you want out.

Lots of variables.