I am beginner and looking for my first deal. I have been listening to the BP podcasts and have downloaded a few spreadsheets to determine COC and Cap rates, but when i use the following criteria that i heard on a BP podcast to eval a MF, i have yet to find a positive COC, or marginal COC! (i live in NJ and have been looking local, but have also tried some in other states)
I use the following criteria below- any advice to adjust the numbers would be helpful...thanks
|10% repairs & Maintenance|
|10% management fees|
Hi @James Lopes , welcome back to the Biggerpockets forums!
Your assumptions look solid to me (much of this will be dependent on the age and condition of the house, but as a general rule your numbers should work well). I think the rub you are feeling is based on the fact that fewer homes will produce a positive ConC than you might think. That's one of the reasons that you can't wisely go buy any home on the market and expect it to perform. If you continue to pursue this and run numbers over and over again, you'll start to see trends and patterns appear and those trends often show us opportunities to buy.
Hey @James Lopes , as Will mentioned above, a lot of the assumptions are dependent on the specific property you are running numbers for. While Vacancy will be fairly steady based on the state/area you're looking in and Property Mgmt. will be fairly standard as well, you can and should modify your allocations for Repair/Maintenance as well as CapEx based on the age and condition of the property you're analyzing.
Obviously, the older a property is, the more you will want to allocate to CapEx in anticipation of some big-ticket items needing replacement in the near future, and same with Repair/Maintenance. Vice versa for newer homes. As you analyze more and more properties, you will learn how to adjust the allocations based on the property and get more confident in no time.