What would you do with this deal.
Hello BP,
First off thank you for the wealth of knowledge you share. So I have an opportunity to purchase a house in Copperas Cove TX for what is owned on the loan. The owner is about to go into foreclose as of Oct 4th. So she is motivated to sale ASAP. However, the property is very small 950 sq 3/2/1. It has a renter in it that is already paying $700 a month and his term will be up in 8 months. Really I like it because it’s been remodeled inside, new roof two years ago. Good schools nearby, safe area to live. However, she stated that the old management company is still working the property, but the contract has expired and they never signed a new contract with them.
If anyone knows that area of the world, is my
Vacancy %, Repairs %, Capital Expenditures %, Property Management Fee % set up correctly or does it need to be updated / changed?
Taxable Value 75,830
Purchase 50,867
Tax 1986.70
Vacancy 10%
Repairs 5%
Capital Expenditures 5%
Property Management Fee 10 %
Investment results:
| Purchase Price: | $50,867.00 | ||
| Purchase Closing Costs: | $3,000.00 | ||
| Estimated Repairs: | $0.00 | ||
| Total Project Cost: | $53,867.00 | ||
| After Repair Value: | $70,000.00 | ||
| Down Payment: | $10,173.40 | ||
| Loan Amount: | $40,694.00 | ||
| Loan Points: | $0.00 | ||
| Loan Fees: | |||
| Amortized Over: | 30 years | ||
| Loan Interest Rate: | 5.000% | ||
| Monthly P&I: | $218.45 | ||
| Total Cash Needed By Borrower: | $13,173.00 | ||
| Monthly Income: $700.00 | Monthly Expenses: $643.95 | Monthly Cashflow: $56.05 | Pro Forma Cap Rate: 4.71% |
| NOI: $3,294.00 | Total Cash Needed: $13,173.00 | Cash on Cash ROI: 5.11% | Purchase Cap Rate: 6.48% |
Really, I know it’s not a great deal, but it’s a property that I can buy into for cheap. Should I work a short sale and see if Bank of America will be able to deal. Wait tell it goes into foreclosure. Because really I have three other properties’s that have better numbers. How would you handle this matter because I do want to help her and her husband out?
Thank you for the help,
Michael