This deal...

5 Replies

Alright, so i realize there may be some risk putting this up here if it really is a steal because someone will swipe it up. But - lesson learned is lesson learned.

Let me show you this deal here

I want to put 20% down get a loan for 160K - mortgage about $757 in the area, and a tenant history of $750 bottom floor $850 so $1600 a month 50% rule says $800 a month. only a $43 dollar profit. Not even close to the $100 - $200 a month that comes from a good deal. 

The real estate agent said this was a killer deal... but I'm thinking $43 dollars a month is a little low...

Am I missing anything 

(just trying to get this first deal happening!) 

@Jordan Burke  

Sit this one out partner. $43/monthly isn't worth your time especially if you have a big blow for insurance purposes or an expensive repair. There are plenty of markets that allow for $100+ cash flow monthly. My personal goal is to have each door I own raking in $100/CF monthly -- if not, on to the next.


Hope that helps

@Evan Manship  yeah, thats my thought. The funny part is the real estate gal told me " This is killer get on it!" It felt like I was missing something... but I'm not right? 

Yeah pass for sure.  Your agent was just trying to make a sale or has no idea how to analyze investments.

@Jordan Burke   I personally would not take this deal and here's why (figures per year):
Purchase Price: $160,085.70
20% Down Payment: $32,017.14
APR: 5%
Revenues
Rental Income: $19,200.00
10% Vacancy: -$1,920.00
Gross Income: $17,280.00
Expenses
Property Taxes: -$853.00
Insurance: -$500.00 (guess)
10% Maintenance & Repairs: -$1,920.00
10% Capital Expenditure: -$1,920.00
10% Property Mgmt: -$1,920.00
Total Expenses: -$7,113.00
NOI: $10,167.00
Mortgage (P&I only): $8,250.00
Cashflow: $1,917.00
Cash on Cash Return: 4.79%
Cashflow  per door per month: $80

You're only making ~1900 a year for a Cash return of 5%. You could probably sink your down payment into the stock market and do just as well or slightly better. This is not a horrible deal but I think you can do better.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here