What, people actually read my posts? What a surprise…
Anyways, looking at just the numbers for this property, it’s not too bad. It shows a cash flow of about $350 per month. The sticking point is the $10k in fixup. You should either discount that or have that number refunded to you right away. If you have to put up that $10k yourself, the property is not a good deal. It will take about three years to get that money back.
Taking a look at the area, the nearest large city I could find was Farmington, in the County of San Juan. I looked at the demographics and some of the census data. The area is growing and is one of the fastest growing areas of New Mexico. It might be a little gem of an area to find, but I think that I would invest in a larger city for more stability.
So in looking at the numbers, there are too many negatives with this property. The $10k, the price of the property is a little high (I estimated a median price of SFR’s around the area at around $95k), the vacancy rate will be a problem considering it is not a big city or near one. Also, if you are going to purchase an out-of-state property, it is best to go with multi-units. You are purchasing a one unit for $120k. For the same price, I bought a four unit in Alabama (which calcs out to $30k per unit).
So bottom line, I am damn sure there are better deals out there.
Keep looking though. Remember, run the numbers and avoid properties with high deferred maintenance costs (like this one!). New Mexico is not a bad area to invest in. It is a growing state and its population growth is on the way up. Still, stick closer to big cities and you want to minimize the amount of money you are putting in the beginning.
