Updated over 6 years ago on . Most recent reply
[Calc Review] Help me analyze this deal
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This might be worth digging further into, @Michael Chilton. The biggest question is why do you think you'll be able to create $100k of value with only $5k of renovation? What you pay is, by definition, what the property is worth.
I'm assuming this is SFR, so you don't pay any utilities, lawn care, or snow removal. A few things to consider in your analysis.
- Vacancy might be a bit low. I usually figure 8%, but that's very localized.
- Repairs and CapEx are probably fine, but they may tick up closer to 15% combined as the years go on.
- 5% management is probably unreasonable. You should figure 10-12%.
- Why a 20 year loan at 5%? Even with commercial mortgages, I'm seeing low to mid 4s. I bet you can find a better rate and longer term, if you want it.