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Clifton Monte
  • New to Real Estate
  • Hawaii
8
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28
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Wife wants me to buy her Grandparents' home to rent after 1 yr..

Clifton Monte
  • New to Real Estate
  • Hawaii
Posted Oct 23 2021, 05:35

It's a family home in Richmond, Va that was purchased and renovated from a tax sale. This would be our 1st home, but we'd be relocating in 1 year.  Below are the rental calculations I've come up with. Before I break the news to my wife, if ANYBODY can tell me how this ISN'T an ABYSMAL deal I'd greatly appreciate it, thanks!!!

Monthly Income:      Monthly Expenses:       Monthly Cash Flow:      Pro Forma Cap Rate:
$1,550.00                     $2,248.06                       -$698.06                            2.35%
NOI Total Cash Needed Cash on Cash ROI Purchase Cap Rate
$8,124.00                     $20,349.00                      -41.17%                            2.35%

======Financial Projections========

     Total Initial Equity: -$334,650.00

     Gross Rent Multiplier: 18.55

      Income-Expense Ratio (2% Rule): 0.44%

     Typical Cap Rate: 2.35%      Debt Coverage Ratio: 0.49

ARV based on Cap Rate: $345,000.00

=======50% Rule Cash Flow Estimates=======

     Total Monthly Income: $1,550.00

     x50% for Expenses: $775.00

     Monthly Payment/Interest Payment: $1,375.06

     Total Monthly Cash Flow using 50% Rule: -$600.06

========Analysis Over Time==========
Annual Growth Assumptions
    3%                   2%                3.4%
Expenses         Income       Property Value
_______________________________________
                                        Year 5
Total Annual Income        $20,536

Total Annual Expenses      $28,645

Total Annual Cashflow      -$8,109

Cash on Cash ROI -39.85%

Property Value                 $407,776

Equity                              $111,347

Loan Balance                   $296,429

Total Profit if Sold            $49,939

Annualized Total Return       28%

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