Should I do this deal?

1 Reply

Should I do one or both of these deals?   Mason

1) Purchase price $94000
Needs $12000
$20000 down
30 year mortgage
$530 payment PITI Rents for $1000 Cash Flow is $470.
ARV is 120K
2) Purchase price $90000

Needs $10000
$20000 down
60 mos no interest
$500 payment ($30000 over 5 years principal pay down) 

Rents for $1000 Cash flow is $330 after taxes and insurance. 

ARV is 120K


Both seem like fine deals, however you are not budgeting any reserves. I typically project 10% for each of the following: repairs/capex, property management, vacancy. When you do that, your CAP rate goes from 5% to 1.9% on the first deal. And 4% to less than 1% on the 2nd property. I think they could be good, but you would need everything to go right, and I just don't know if I have ever seen that happen.

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