Turnkey Pro-Forma 101, LOL

[Account Closed]

So I'm getting to a point where I have more acquisition pipeline than I can purchase myself. I'm doing research on selling the surplus, & I ended up on the BP Marketplace. Looked through a few posts, and saw a few deals from a frequent poster that were laughable.

70k for a turnkey property on a rough street in columbus... rented for $800/mo... and the pro forma they're pitching is RIDICULOUS...

-4.1% Interest on a 30 year fixed loan. Should be 4.75 minimum.

-6% Property management. Call it 10% in a market where rents are low.

-4% Maintenance reserves. Should be at least 10%.

-4% Vacancy... I google mapped the street... and I would call it 8% (that's 1mo./year)

-$70 per month in taxes. This will double for an absentee owner. And this was based on a tax assessed value of $17,000.

-ARV is $77K... but every nearby comp on the street is $40-$50k.

-cash on cash ROI of 23%. I ran my own numbers on the same deal and got 11%.

Turnkey buyers, I get why you do it. Dealing with direct mail and contractors sucks. But pleaseeeeee know your numbers well. There are so many deals like this ^^^ selling like hotcakes. Don't buy them. Be conservative. It will make you money :)

If you don't feel comfortable dissecting a pro-forma... hell just ask me. I love numbers, I will gladly dig into samples with you.

Hope this helps someone out there!

Elliott

[Jay Hinrichs]

@Account Closed  just like Memphis has city and county tax.. or that Texas rates are through the roof and has expansive soils... or?????   you get the drift  there is always something in each area that you need to be aware of .. seems to me all markets have pro's and con's

bottom line is its no real mystery for this stuff.... you don't need some fancy spread sheets or cash flow calculator.. its 50% of rent up to about 100 to 1200 minimum for on going Cap ex PM taxs insurance maintenance ... and higher with low rents ... end of the day that's were it flushs out these are just SFR and simple one's at that ...

that's the first thing you do when looking at rentals then figure it out from there...

PM will make or break you no matter the numbers..