Need someone to look over these numbers...

Real Estate Deal Analysis & Advice
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Need someone to look over these numbers...

Wesley Adams
Real Estate Investor · Austin, TX · Member since 2010 · 64 posts · 10 votes

I am currently searching for my first income property. i stumbled upon this and want to know what you all think.


Actual Valuation
Asking Price $32,900
Appraisal Value/ ARV $55,000
Est Rent per month: $825 per month
Est Expenses: $413 per month
NOI $413 per month
Desired Cash flow per unit: $200 per month
Number of Units 1
Total Desired Cash Flow $200 per month


Max Payment= $213 per month

Max Loan Amount= $37,425.87
Repairs/ Reno $0.00
Purchase Costs (~3-7% for residential $3,000.00

Max Offer $34,425.87

Down Payment $6,885.17
Est Mortgaged Amount $27,540.70

Est Mort Payment: $168.14
Monthly Net Profit $244.36
Annual Net Profit $2,932.29
Total Cash Investment $9,885.17
Annual Cash on Cash Return 29.7%

Value of 30% or more? 59.82%
A discount of: 40.18%

I'm not 100% sure i'm doing this right. I've tried to piece my spreadsheet together from others as well as Jon Holdman's posts......Is it true that based on these numbers and a mortgage of 20% down, 6.175% for 30 years that I can offer anything up to full asking price and still come away making $200 a month? Just seems too good to be true on a property that has been recently updated (not to say that I won't see issues once I visit the house).

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Account Closed
Landlord · Seattle, WA · Member since 2010 · 3k+ posts · 1k+ votes
15y

The numbers sound good and the property is worth investigating in my book. You will want to verify the numbers. What kind of vacancies are normal in the area?

I agree with Mitch that 800 for rent seems high and you would want to investigate comparable rents in the area. If rent is to high you may be facing higher vacancies. So you want to learn what the market rents are.

You may want to get your own estimate of what the repair costs are likely to be.

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  • Mitch Kronowit
    SFR Investor · Orange County, CA · Member since 2009 · 1k+ posts · 1k+ votes
    15y

    Where in the USA does a $32k house get you over $800/month in rent? I'll put one on my credit card! ;-)

    0Reply
  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    15y

    If those are really the numbers (could be a big IF), it looks good to me...

    Does the house need any rehab?

    Is it in a war zone?

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  • Account Closed
    Landlord · Seattle, WA · Member since 2010 · 3k+ posts · 1k+ votes
    15y

    The numbers sound good and the property is worth investigating in my book. You will want to verify the numbers. What kind of vacancies are normal in the area?

    I agree with Mitch that 800 for rent seems high and you would want to investigate comparable rents in the area. If rent is to high you may be facing higher vacancies. So you want to learn what the market rents are.

    You may want to get your own estimate of what the repair costs are likely to be.

    2Reply
  • Wesley Adams
    OP
    Real Estate Investor · Austin, TX · Member since 2010 · 64 posts · 10 votes
    15y

    Thanks guys for all of your input. Yea, I admit the numbers are probably kind of high. I only did a quick check on craigslist to see what a 4 bedroom rental was going for in that area of town. The ones I saw were mostly apartments running in the range of 700/ month. Since it is a townhouse in a lower income neighborhood I just estimated. I was more interested in seeing how the equations related to one another and giving myself some type of quick analysis to determine if a property was worth looking into further. I'm not sure if it is in a warzone or not. But that was my initial reasoning for creating my spreadsheet, to see if I even wanted to take the time to go see the property.

    Admittedly, I still have a lot of verification. I will contact the listing agent today to see about any kind of repairs. The seller is listed as highly motivated.

    Is it wise to ask the listing agent what typical rent would be or what kind of vacancies are normal in the area? Or would that line of questioning be better suited for my agent (whenever I enlist the help of one)?

    0Reply
  • Wesley Adams
    OP
    Real Estate Investor · Austin, TX · Member since 2010 · 64 posts · 10 votes
    15y

    also, the seller is offering 6% sellers help. would this be advantageous to utilize or no?

    0Reply
  • JIMMY T.
    Flipper/Rehabber · ALLENTOWN, PA · Member since 2010 · 38 posts · 19 votes
    15y

    Allentown, PA

    $32k + $3k rehab and get $980 a month
    $15k + $10k in rehab and get $900 a month

    alot more where those came from :D

    1Reply
  • Wesley Adams
    OP
    Real Estate Investor · Austin, TX · Member since 2010 · 64 posts · 10 votes
    15y

    I would look into Allentown if I lived closer. Know any awesome property management companies out that way?

    0Reply
  • Steve M.
    Realtor · Gallatin, TN · Member since 2009 · 292 posts · 164 votes
    15y

    Zipskinny - 18102

    When 25+% of the population is living under the poverty line, I have no idea how you command those rents .... Doesn't look like there will ever be any appreciation, so I wonder how long a strong rent market will hold there.

    just my thoughts :)

    1Reply
  • JIMMY T.
    Flipper/Rehabber · ALLENTOWN, PA · Member since 2010 · 38 posts · 19 votes
    15y

    Yes, I do Keystone Property Maintenance and Management is one the best out here. Ask for Tony the owner.

    Im not too worried about appreciation I know in due time everything will get back on the upswing wether its 2 years from now 25 years from now. Im more interested in holding for a long time for the extra income and they are on section 8 (clockwork) and actually the one im getting $900 for I could've been getting $1,000 because its a 5 bedroom. (and they arent in the "hood")

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  • Will BarnardPro Member
    Moderator
    Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
    15y

    Numbers as posted look great to me. The error I see is your "guess" to rent value. You mentioned in a second post that other apartments rented for $700. That is a $100 reduction in your gross cash

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  • Wesley Adams
    OP
    Real Estate Investor · Austin, TX · Member since 2010 · 64 posts · 10 votes
    15y

    Thanks again to everyone for helping a noob like me out. I had talked with the seller's agent a few days ago and they mentioned that the seller was offering $6000 in sellers help. What exactly does that mean and would it be beneficial to factor that into the decision making process?

    0Reply
  • Calvin N.
    GA · Member since 2008 · 173 posts · 16 votes
    15y

    It sounds like the seller is willing to contribute $6000 towards repairs and/or closing costs. Yes, I would factor that into your numbers. Closing costs should not be that high but you may have some repairs that are needed that you could use some of the money for.

    0Reply
  • Wesley Adams
    OP
    Real Estate Investor · Austin, TX · Member since 2010 · 64 posts · 10 votes
    15y

    Am I allowed to designate how that gets applied to the purchase? In the contract would I state that seller covers closing cost ( in my earlier post were $3000) and then apply the remaining $3000 to my down payment? If that were the case, is it true that I would show up to the closing with approximately $3885 and be good to go?

    0Reply
  • Alex Kastanes
    Real Estate Investor · Columbia, SC · Member since 2010 · 5 posts · 1 vote
    15y
    Originally posted by Mitch Kronowit:
    Where in the USA does a $32k house get you over $800/month in rent? I'll put one on my credit card! ;-)

    I have 13K (purchase price and repairs) in a house just north of 7 Mile in Detroit bringing $800 a month in rent. But if I told someone to go invest in Detroit I would probably sound crazy to them.

    1Reply
  • Wesley Adams
    OP
    Real Estate Investor · Austin, TX · Member since 2010 · 64 posts · 10 votes
    15y

    I've looked at Detroit and the surrounding areas.. I just don't know enough about that market to even begin considering it. Heck, I live within an hour of this property and I'm still not sure about certain criteria.

    0Reply
  • William Ware
    Investor · Holly, MI · Member since 2009 · 95 posts · 23 votes
    15y
    Originally posted by Mitch Kronowit:
    Where in the USA does a $32k house get you over $800/month in rent? I'll put one on my credit card! ;-)

    Taylor MI, invested $33000, 3/1 SFH - $900.. No rehab
    Ypsilanti MI , paid 25k cash, 6k rehab, 3/1 SFH $850
    Ypsilanti, MI , paid 20K cash, 8k rehab, 3/1 SFH $850

    No Sec 8, no war zone,
    Always looking for cash investors

    1Reply
  • Wesley Adams
    OP
    Real Estate Investor · Austin, TX · Member since 2010 · 64 posts · 10 votes
    15y
    Originally posted by Calvin Neely:
    It sounds like the seller is willing to contribute $6000 towards repairs and/or closing costs. Yes, I would factor that into your numbers. Closing costs should not be that high but you may have some repairs that are needed that you could use some of the money for.

    I was just playing with the numbers again, and wanted to see if it was possible to have the closing costs rolled into the mortgage and take the sellers 6K help and put it towards the down payment?

    0Reply
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