At the time of purchase, the credit market was just starting to tighten so I had the option of 10% or 20% down. I wasn’t completely confident in the area rental market so I decided to put 20% down on this property. If this property works out then I’d go with 10% on the next properties. A decision I’d later regret as the 10% down investor loans were soon a thing of the past.
Soon after I closed on the purchase I had Tom Deere at DFWMakeReady update the property with fresh interior paint, fixtures, hardware, blinds, shutters, garage door opener and front door paint. The entire work was roughly $3k. I could probably find it cheaper but I appreciate that Tom can handle it all with very little oversight.
I secured a 30 yr fixed rate loan at 6.25% for 76k so my principal and interest payment is $473/mo, Insurance is $60/mo and taxes were $318/mo through the remainder of 2008. I protested the property tax value in 2009 and reduced my taxes to $239/mo. So, my total expenses are now $772/mo.
I decided to price it at the lower end of the market to rent it quickly. I fired up my Investway online service to check the all the active and leased rental comparisons within 2 miles of the property and settled on $1095/mo. I dropped a sign in the yard (created by fastsigns) then posted at Craiglist and RentalHomesPlus.com. I also purchased a lockbox to allow prospective tenants in without having to meet them at the property. Within a few days I had several applications for a lease with the potential cashflow of $323.
I utilized e-renter.com to download a lease application and run credit checks online. I also downloaded a lease agreement and modified it slightly. I ran several credit checks and were returned with relatively poor credit since many of the renters have been foreclosed on recently. I finally decided on a tenant with decent credit and a solid job. He stayed for 9 months then had to leave for a job transfer. I released him from the lease (but kept his $1k security deposit) as my brother and sister-in-law were moving into town and needed a place to live until they purchased a home.
After my brother and sister-in-law moved into their new house, I signed a new lease for $1145 to increase my cashflow to $373/mo. Overall, a good purchase. I’ll probably keep it for a few years and sell for roughly $130k when the market bounces back.