First Deal...what am I missing?
After a few months of searching I think I'm ready to purchase my first investment property. This will be an out of state deal in south Florida. My realtor works almost exclusively with investors and has the connections to see this through. Because of this she gets 2% of the sales price on this wholesale deal. I'm also thinking of incentivizing it a bit more and offering 10% on the difference between the sales price plus rehab costs and ARV. Her husband then works the property management side and offers 8% fees (used 10% in my below math just in case).
Duplex - 2/1 both sides
Purchase: $97K all cash no and includes realtors work for finding the deal
Rehab: $20K (floors, kitchen/bathroom, paint and other cosmetics)
ARV: $135K (will then refinance at $101K leaving roughly $16K in the deal)
Rent: $800 each $1600 total (current tenants on month-to-month at $500 on both sides)
Vacancy: 10% ($160), CAPEX: 8% ($128), Property Mgmt: 10% ($160)
Mortgage: $376, Taxes: $150, Insurance: $100
Lawn Care: $100, Septic: $13
Cash Flow: $413, CoC: 30.9%
Property is in a very stable C Class neighborhood. My numbers are very conservative. Rent comps from realtor and property manager as well as my own research say each side should rent at $850. The sales comps also put the ARV a little closer to $143K. My only major concern is the rehab. Numbers I have been given are between $15K and $20K. I think even if the true number is $30K I'm still looking pretty good. Another concern is dealing with the current tenants in regards to the holiday season. I'm thinking of keeping them in place until after Christmas for the mere fact that even if I do move them out and rehab, it will be difficult to place tenants in mid to late December.
What are your thoughts, what am I missing or not asking myself?
Thanks for the insight!
-Shawn