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Marcus has a home and is ready to purchase his first rental property. Marcus found a property that needs some work so he can get
- Marcus has a home and is ready to purchase his first rental property. Marcus found a property that needs some work so he can get a low price. He will use his own cash. The home is listed for $150,000 and it will need about $35,000 of rehab expense while he does the work himself over one year, at which time he will rent it out. He thinks that he will wait until the second year to do the roof and replace the HVAC system for $18,000. This area rents homes this size for $1,950 per month. Marcus anticipates selling the rented, renovated home at the end of 5 years for $195,000 and moves on to something bigger. If Marcus wants at least 15% on his money, what is the most that he should pay for this home?
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