Cash flow - Is this a good property to invest?

[Robert Caccire]

Can someone advise if below information is a good cash flow property?

purchase price - $950,000, buyer will do owner to owner financing of $200,000. It will be a 5 year interest note only balloon in 5 years. 

We will pay cash of $750,000 coming from a 1031 exchange. 

Rent roll is $9,600 per month 

Expenses estimate of $3k per month. 

Cash flow of $6,600 per month.

Leases in 2024 will increase $500 extra per month. 

[Samuel Eddinger]

I don't think I or any sophisticated investor would have enough information to make a determination for you.

With that said, I think in CT (based on lots of underwriting that I have done), a good rule of thumb is that your Expense estimate (excluding debt service) is about 50% of the Gross rent. This will take into account things like vacancy, bad debt, Capex, water/sewer, maintenance, taxes, insurance, etc.

If the rent roll is $9,600 or even $10,100, you should assume about $5,000 in expenses a year on the property.  Would you buy a property for $950,000 that nets less than $5,000 a month (when including the debt service to the owner).  That is a return of about 6% which might be good when you consider the other benefits you get (appreciation, inflation, depreciation).

This discussion did not even discuss any of the other intangible like deferred maintenance and/or CAPEX that is needed immediately.

Happy to discuss this further.  DM me if interested.