Am I over estimating expenses?
I'm about to jump into my first real property and I want to know if I am overestimating expenses. It's a 3 family for $70K and rents are generating $2100 per month. The property needs about $20K worth of work. I have all the current owners expenses (tenants pay their own electric), so I know those are accurate. But, am I overestimating on the accrued expenses like vacancy, maintenance, ect?
| Actual Expenses | |
| Water | $75.00 |
| Trash | $60.00 |
| Heat/Gas | $361.00 |
| Sewer | $60.00 |
| Insurance | $150.00 |
| Snow/Lawn | $100.00 |
| Taxes | $200.00 |
| Estimated Expenses | |
| Vacancy | $210.00 |
| Management | $200.00 |
| Maint | $210.00 |
| CapEx | $210.00 |
| Total Expenses | $1,836.00 |
| Rents | $2,100.00 |
| Monthly Cash | $264.00 |
| Yearly | $3,168.00 |
You may have noticed that there is no figure for financing or mortgage expenses. The down payment and rehab money would come out of pocket (about $27K) and the owner will carry the mortgage for a few years which would allow me the time to fix up the place a bit and refinance into a conventional 30 year. The ARV woudl be $130K. I would estimate the mortgage expense to be about $300 per month on a $65K-ish mortgage. If I'm correct on the accrued expenses, it's not really a deal worth doing so I need a little BP community help.
Thanks,
Jeff