Feedback on Buy and Hold Analysis

[Daniel Erdman]

Hey All,

My wife and I are looking to develop a portfolio of rentals in the northern portion of California's Central Valley (Sacramento and surrounding areas). I have been practicing analyzing cash flow on some of these properties and I need some feedback from those with experience.

I have included a breakdown on a property that I have located on Realtor.com, a quad in Modesto:

Purchase Price	$ 305,000.00
Mortgage (20% Down)	$ 1218.00
Assessed Value	$ 305,000.00
Tax Rate	1.3%
Taxes per Mo.	$ 330.42
Gross Income*	$ 34,000.00*
Gross Profit	$ 2,833.33
Maint.	$ 100.00
Management Rate	10%
Management Cost per Mo.	$ 250.00
Insurance	$ 80.00
Expenses Total	$2011.75
Monthly profit	$ 821.58

*The Gross is calculated using a rent of $825 per unit. Four units (quad) = $3300 per month or $39600 per year. I then deducted $5600 from the gross to account for utilities not paid by the tenants and other misc. expenses. This is what I am calling Operating Expenses.

I am not sure how to appropriately account for Operating Expenses and vacancy.

Other than the above, is there anything else I missed? And, would this be a profitable property? Is this realistic?

I am not buying this place, I am simply interested in seeing if my analysis needs tweaking.

Thanks!

[Brie Schmidt]

@Daniel Erdman - You should know the vacancy rate in the area and use that as an actual number.  If the houses are newly rehabbed then I would be ok with the 3% maintenance you have, but it is more likely going to be 5-10%

Utilities will also depend on what is common in the area.  Is water split?  Are the common gas and electric meters?  Each property will depend and you will need to know the cost