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April 18th, 2014 at 7:11 pm
Since it's an off day, random biz question. I'm looking at buying another house, fixing it up and renting it. Problem is, I think the cap rate will only be 10%. There is a little bit of possible appreciation, but it's not in a booming area.
It's very small money. 40K for the house. 25K (high estimate) for the renovation. Needs a new roof, bathroom, fencing. The street is pretty nice, with lots of homes in good shape. Rent will be about 700-800/mo. Taxes 2K/yr, insurance 2K/yr, water/garbarge 1.2K/yr.
It's my age old dilema. Is it worth it to deal with tenants to get a possible 10% return a year, and maybe I could sell it for 90K in 5yrs? Or is it worth it to put that 70K in Reg-T margin to work in the market? Can I guarantee a 10% return in the market over 10 years? Beats me. Thanks why I'm posting.
(my gut tells me to pass, but I'm a sucker for a deal)