Analysis help, please.
Please help me look at this deal. I am getting really close to my first purchase. Have been learning all I can here, but feel nervous about my interpretation of how to analyze a deal and I know many of you can do it with your eyes closed.
Here are the numbers:
Asking price: $36,900
Average rent in the area $650 - $900 I have gathered enough cash from different sources but plan to finance it through a HELOC which requires a payment of $232 per month. No immediate payments, but I want to calculate it all from the start.
50% Rule
$650 rent = $93 cash flow (Not great but close to $100).
$700 rent = $118 cash flow
$850 rent = $193 cash flow
$900 rent = $218 cash flow
2% rule works
$650 rent = $32,500 purchase price
$700 rent = $35,000 purchase price
$850 rent = $42,500 purchase price
$900 rent = $45,000 purchase price
I am using the $650 for my calculations, to look at it from the most conservative angle.
I am going to have an inspection to rule out any major problems and to get an estimate on repairs. That will help me determine my offer keeping the 2% rule in mind.
Am I on the right track? What am I missing? What would you do?
Thank you for taking the time to look this over and send me your feedback,
Pyrrha