Would this be a good single-family rental investment?
Looking at a property 4 blocks from my primary residence and another rental. We already own 3 duplexes (self-managed) but this would be our first SFH.
Property basics:
• Offer target: $235K listed at $299k earlier in the year. Removed listing and relisted at $270k. Motivated seller who is moving out of state.
• Financing: 20% down conventional, loan ≈ $188K
• Taxes: $4,800/yr
• Insurance: $180/mo
• Seller concessions: 2% ($4,700) applied to rate buydown
• Rent comps: conservative $2,000–$2,200 (possible $2,400 but house is smaller at ~1,248 sq ft, 4/1). Some show around $2,100 in some duplexes with no yard parking. This house has no garage but can park in backyard through a driveway.
Condition:
• Fence needs replacement
• Roof is 15–20 years old (no leaks)
• Interior rental-ready (new counters/backsplash would help but not necessary)
Numbers (at $2,200 rent, $235K price, 20% down):
• At 6.5%: ~$100/mo cash flow (thin)
• At 5.5% (1% buydown): ~$220/mo, ~8% CoC ROI
• At 5.0% (1.5% buydown): ~$280/mo, ~9% CoC ROI
• At 4.5% (2% buydown): ~$340/mo, ~10%+ CoC ROI
We may also consider adding additional funds beyond seller concessions to buy the rate down further since it’s relatively cheap to do.
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Question: With these numbers and condition, would you consider this a solid conservative buy for a first single-family rental, or would you hold off for a stronger cash-flowing deal?
First SFH Rental – Worth it at $235K with Rate Buydown
byu/WaterCamel inrealestateinvesting
Posted by WaterCamel