after weeks of looking and looking, i think we finally found a "deal". over the course of the past couple weeks and dozens and dozens of house that we looked at, we saw homes that were mainly overpriced. even some that were in a terrible state of disrepair were asking for a pretty penny.
then, this sunday, everything changed. we looked at two homes, and we liked both of them! one was a foreclosure and would need a good amount of work to get it into a habitable state, but it was at least priced right. the other had been sitting on the market for a while and had just dropped the price about 12%.
this second one was in pretty good condition and had been upgraded a fair bit. and, the listing agent was offering that the seller was "motivated". we'll see just how motivated he/she is as we'll be making an offer at a discount of another 7% of the list price.
my my figures, based strictly on cash flow and making some assumptions about the cost of maintenance, occupancy rates, etc. i'm guessing that we can make about 4.5% on money that we are putting in. that's based strictly on cash flowing from rent, over the long term, even assuming that the value of the property stays put, the return actually moves to 11-12% when you take the build up in equity over the course of the mortgage.
now, i'm a novice at this, so i may be way too optimistic with my models and assumptions, but i'm going to give it a try and i'll report back on the details.