Is this a good investment? - Posted by Lauren

Posted by Cary on March 04, 2002 at 20:12:06:


What type of marketing would you recommend?


Is this a good investment? - Posted by Lauren

Posted by Lauren on March 04, 2002 at 18:18:15:


I have the opportunity to buy some new houses for $6000 down and then rent them out. Does this sound like a good deal?:

price 125K
down payment 6K

P&I @ 7 3/4 $857 mo (financing in place by builder)
taxes/insur: $120 mo
prop mgment: $40 mo
Total: $1017 mo

Monthly rent: $1100 month in a very hot rental market.
This leave $83 month profit. The houses are new and under warranty, so the maintenance should be very low. The area needs rental houses, so vacancy should be low.

Any input on this would be appreciated. We are just starting out in REI.


Re: Is this a good investment? - Posted by Robert (NC)

Posted by Robert (NC) on March 04, 2002 at 21:11:12:

I don’t think there is enough profit here to justify the risk for a new investor unless you have a large cash reserve. If it is really a hot rental market, run some test ads to see if you might could get 1300 a month in rent… That would make it a much better deal from a cash flow standpoint.

I’m in on a property that isn’t anything creative, however, it will have a very good cash flow if I can rent it at full price, however, rental market in my area is soft right now… so if I lower the rent, it still has a ‘ok’ cash flow and right now I want cash flow with a buy and hold strategy for this property.

One more thing… What are your short term, mid term, long term goals ?? Does this property fit into those goals ?


Re: Is this a good investment? - Posted by Brent_IL

Posted by Brent_IL on March 04, 2002 at 19:39:26:

I noticed that you said you were just starting out in real estate investing. You didn’t mention “creative.”

I think a lot depends on your personal inclination. Instead of buying “some” of the houses available, why not acquire one or two and keep some cash in reserve for the unexpected. A one-month vacancy would wipe out a years worth of profit.


Re: Is this a good investment? - Posted by JoeS

Posted by JoeS on March 04, 2002 at 18:49:46:

I am not a wizard in income properties. However, the first question that comes to mind is this; how much are the type of homes that you want appreciating per year? If it is 15%, then yes it is a decent investment, if it is less than 10%, then I could think of better ways to invest that 6K!
For example; put 1K down on a seller financed income property, rent it out for a while, sell it for retail, pocket 10K! Good return! Hope this helps.

Re: Is this a good investment? - Posted by DavePA

Posted by DavePA on March 04, 2002 at 18:23:53:

I can think of ALOT of ways to spend that 6K you have for a down payment!! I would make good use of it for my marketing per month.
You are NOT leaving yourself with a whole lot of + cash flow. Even, though the properties are new, things can still happen.
What if you have a vacancy for a month or two? Where is the $$ coming from to pay those mort. payments?
This is a creative website. Things being discussed and taught and explained on here are different from what you want to try and do.
I am not being harsh, but ALOT of other investors would find a better way to spend 6K!!

Sorry so blunt,
Good Luck,


Re: Is this a good investment? - Posted by MK

Posted by MK on March 05, 2002 at 09:16:05:

Hi Joe
Could you explain the example you have given…I am a newbie so explanation in detail would help some newbies like me.
thanks in advance.