No. of Recommendations: 4
If everyone else is giving you 2c, then mine is probably worth 1.5c :)

One of the biggest assumptions in the calculations above is not the ultimate cost of the house (controllable), but what you will be able to rent the property for. In my experience, that number is the less controllable variable when compared to the price tag at closing. It is also the more difficult to measure due to the fact that certain repairs might need to be done to get a market rent. So now you have two very hard to estimate numbers to determine the driving force of your new investment home!

You get to be as patient as you want to settle on the right closing cost. However, after closing the market will dictate the rent amount. When talking to my buddies who have often spoke of venturing into RE but never do, they always spend a lot less time examining the rent number and a whole lot looking at what their note to the bank will be. They flippantly throw out a rental number that rationalizes the purchase (emotional). Not at all implying that you are doing the same, just personal observations from some friends.

You will never know the numbers for sure, but the way to nail them down some is by examining the lifecycle of a couple comparables and examine the quality comparative to your property, and the ultimate rent obtained.

Now this a lot of work and you might miss out the current property, but here is my personal philosophy on rentals:

1) Become an expert of a certain are within my resident county.
2) Choose 5 prospective neighborhoods in #1 that are near schools, fit my price range, and have a good builder reputation.
3) Here is one that people usually don't consider - Make rental property 10 minutes away from my personal residence.
4) Know the area, neighborhood, and approx. rent fetched per square foot before ever considering a property to bid on.

This philosophy is my personal one, and therefore not for everyone - but I thought I would share none-the-less. #3 is an important one to me because I want to be a good husband and not be gallivanting across town at 10 pm because something exploded.

All the Best!
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