So, I made a cash offer of $150k for this sweet little single-family home with 3 beds and 1 bath. The sellers were originally asking $190k, but after two other offers fell through at the last minute, they were just ready to get rid of it and accepted my offer. With closing costs factored in, the total cost for the house came to $155k, no mortgage involved.
Now, similar homes in the area rent for $1600 a month, and after accounting for monthly taxes and insurance, I’ll be pocketing $1300 from this one property. Crunching the numbers, my cap rate works out to around 10%, which feels pretty solid to me.
I’m stoked about owning this property outright without having to deal with a mortgage. Not only does it create some killer cash flow, but snagging the place for $40k under its market value has also given my net worth a nice little boost. I’ve heard folks talk about leveraging debt to maximize returns, but with today’s interest rates, I’m just not seeing how that would make sense for me right now.
I’d love to hear what you all think about my strategy. My goal is to keep saving up and hopefully snag another property outright in the next 3-4 years, and then just keep repeating the process. It feels like a solid plan to me, but some feedback and advice would be awesome. Let me know your thoughts!