From: ehcorp1@lycos.com
Newsgroups: alt.invest.real-estate
Subject: Re: newbie SFH investment
Date: 25 Sep 2003 13:30:28 -0700

tdsnv@aol.com (thecleaner) wrote in message 

> My question is would you do this deal.

Short answer:  "no"


> Builder, who is a fiend, is selling me a new SFH for $190,000.  It
> will be completed in Jan. or Feb.  He has built this exact house at
> least 50 times in the development.  The exact same house plus
> landscaping, etc., sells for $215,000 when finished.  I am thinking of
> buying and then renting it.
> 
> The going rent in the neighborhood is about $1300-$1400 per month. 
> After the loan, taxes, maintenance, etc., my cash flow will be barely
> positive.  The city where I live has had a very strong RE market for
> over 20 years.  Land is extremely limited, and the area is very
> popular.  I would like to hold onto the property, and let it
> appreciate while someone else pays for it in rent.
> 
> What worries me is the hundreds of posts on this board telling
> everyone cashflow is king, multiply the rent by 77 or 85, 50% cashflow
> ratio, etc.


Yes, I'd be worried too.  First of all the property probably won't
cash flow in in the real world over time.  If you wish to play
landlord, why not find a distressed seller so you can atleast have a
chance at acquiring your project at something other than retail.  If
you really think paying $190K for a home that sells for $215K try
buying it, paying a realtor, paying holding costs yadda yadda yadda. 
You might learn why your buddy is happy to kick a house over to you
for $190K.