Please help me analyze this deal

7 Replies

it's a 3-plex in an A area. asking price 233,000 . 

rents: 1) 1000.00   2) 750.00   3 ) 750.00

exp: taxes 6587.00   insurance 1675.   water 1,100 . 

tenants pay all except water.

i would put 25% down, leaving me a monthly payment of about  $1,200 (?) plus expenses above. I think i can make $200 a month, but please feel free to correct me---thanks! 

Taxes are $6587.00 !!!!!!!!!  WOW.  

Any way to improve rents? Any way to add value? 

@Marci Stein    good rule of thumb is 50% which includes reserves and PM... so on the surface over time this is

probably a break even property which is pretty common for A class.. you are banking on appreciation and your tenants paying down your mortgage so you create equity every month. there is nothing wrong with breaking even on A class and having your tenants pay your mortgage.

Medium ksqoekox 400x400Jay Hinrichs, TurnKey-Reviews.com | Podcast Guest on Show #222

You will have maintenance/capital reserves of $2,500s-4,000, management of about $4,000 + vacancy of about $1,500.  If you can break even with the added expenses you will be making over 10% on your money.

Good Luck.

Bill

@Marci Stein   Hi Marci

Here's the numbers I ran using the Real Estate Calculator which is an android app.

I assumed you will be using a property manager. You should be able to clear +200 plus a month.

@Jay Hinrichs   I agree. If this is a class A property, there's nothing wrong with breaking even. In your case Marci, you're cash flow positive and if you decided to manage it yourself your cash flow would be much higher.

Purchase Details
--------------------
Purchase Price = 233,000
Closing Costs = 6,900
Renovations = 0
Lawyer = 0
Misc = 0
Down Payment ($) = 58,250
Down Payment (%) = 25
Interest Rate (%) = 4.20
Years = 30

Income (Monthly / Yearly)
------------------------------
Rent = 2,500 / 30,000
Misc = 0 / 0

Expenses (Monthly / Yearly)
------------------------------
Property Tax = 548.92 / 6,587
Association Fee = 0 / 0
Broker Fee = 0 / 0
Management Fee = 250 / 3,000
Insurance = 139.58 / 1,675
Water = 91.67 / 1,100
Sewage = 0 / 0
Electricity = 0 / 0
Gas = 0 / 0
Heating = 0 / 0
Repair Estimate = 250 / 3,000
Vacancy Estimate = 125 / 1,500
Office = 0 / 0
Travel = 0 / 0
Accountant = 0 / 0
Misc = 0 / 0

Results
----------
Cash Required = 65,150
Loan Required = 174,750

Monthly
----------
Income = 2,500
Expenses = 1,405.17
Financing = 854.56
Net Income = 240.28

Yearly
----------
Income = 30,000
Expenses = 16,862
Financing = 10,254.69
Net Income = 2,883.31

Capitalization = 5.48%
ROI / COCR = 4.43%

Wow--impressive ! Thanks for all the help :)

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