1st rental property analysis

5 Replies

Good evening everyone long time browser here on Bigger pockets finally ready to pull the trigger here. Just would like someone to look over my numbers on a property. Hopefully someone could correct me if I’m wrong with my numbers and let me know if this property is even worth it. I keep running the number on a different website and this is what I come up with. But when I do it on bigger pockets calculator I get  a way less desirable result.

Purchase price 158000

5% down=$7900

30 year fixed assuming 4.25% not sure exact figure here rough estimate

Rent $1300

Mortgage $738

Vacancy $65

Property taxes $158

Rental insurance $85

Maintenance $65

PMI $67

Cash Flow $122

NOI per year $855

Cap rate 6.5%

IRR 27%

Thanks too anyone who can advise much appreciated 

Hey there @James Roux , I will give a quick look for you. 

Let's assume your rent estimates, financing and expenses are correct.  

$1300 - ($738+65+158+85+65+67) = $122/month ($1464/year cashflow) so that part looks ok. I see maintenance in there but no Cap Ex allowance and I have no idea where you are getting that NOI number but that seems way off. Looks like you will self manage then so no PM expenses? I'm curious where you are going to get financing at that rate with only 5% down on an investment property?

I'm also assuming this is move-in ready as I don't see any upfront rehab costs. I would focus on your cash flow and cash over cash returns then cap rate or IRR also. All and all it's certainly not a home run by any means but depending on a variety of other questions to ask it could pen out for you in the end. When the margins are this thin, you have to get super specific and accurate on your costs and rental and vacancy estimates. Make sure you are accounting for future Cap ex as well as that will hit you like a truck if you are running on such thin cash flow each year (you will need a new AC, roof, etc at some point so you have to set aside for it now).

Best of luck !

Hey there jon yes I will self manage it and the numbers are as accurate as they can be I’m confident it’s hard to find anything over here that’s cheap enough that’s rent high enough 

@James Roux Just a little heads up. Have you talked to a lender already or are you planning to live in the property to start? Most lenders wont let you put less than 20% down on an investment property, and investment property rates will be more like 5-6% depending.