Analyzing A Potential Deal

3 Replies

Hi all! I'm analyzing the numbers of a SFR property I found on Trulia before I reach out to a real estate agent to look at the property. I have not done any deals yet but this one looks promising to me because the owner has a tenant in the property until September 2018 and the property only costs $10,000 so it seems like my risk is pretty low starting out. The city is one to which my wife and I plan on moving in the next year, and one where I currently work, so we would not need to pay property management fees for at least this first year.

I have a few questions for you pros on here:

1) When investing, should I purchase with a 15, 20 or 30 year mortgage? The 30 year option yields me about the $100/mo net, but I prefer a 15 year mortgage to pay off sooner. Cash flow, though, is my primary objective.

2) I've attaches some photos of the income/expense sheets. Could someone look these over and correct me if I made any errors?

3) Do I need to account for replacement reserve if I have accounted for repairs and CAPEX already?

4) I don't have an exact number yet on how much insurance would cost annually, but that's an estimate based on some other properties in the area I know of.

Thank you so much in advance!

I think if you are focused on Cashflow I would go wth the 30 year mortgage option. If you are focused on Cashflow the name of the game would be to generate the largest return for your $ invested. I would focus on Cash on Cash return.

The screenshots seem reasonable below. I would also incorporate a line for vacancy.

I think as long as your account for CapEx and then from an operating perspective you add any unspent CapEx into a reserve account you will be fine. Including both in an analysis seems a bit duplicative.

Hope this helps!

Thank you @Jim Murray !

I also just learned from my real estate agent that lenders typically do not render mortgages for under $50,000. So now I'm in a rough spot because I want to get started investing but do not have the capital yet from my family income, and I do not personally know any private lenders. Suggestions?

@Nate Estelle Best route would be to go to a local REIA group in your area to find a private lender.

Also, BP is a great resource to find a lender. It is amazing at how much money is out there to fund deals. 

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