Updated over 10 years ago on . Most recent reply
Is my analysis too conservative?
I feel like a lot of the deals I look at would cash flow but when I run them through my analysis spreadsheet almost all lose money. I'm fine with being patient but I want to make sure there's not an error in my analysis. Below is a sample property for sale in my area that I would have thought would cash flow, but according to my analysis it would not. Any thoughts or ideas?
My assumptions on my analysis are:
Advertising = $2.50/unit each month
Legal & Accounting: $5/unit each month
Groundskeeping: $80/month average
Water/Sewer: $20/unit per month
Trash: $15/unit each month
Maintenance: $75/unit each month
| Number of Units | 4 | |
| Down Payment | 20% | |
| Vacancy Rate | 10% | |
| Initial Repairs/Unit | $5,000 | |
| Monthly Repairs/Unit | $75 | |
| Avg Rent/Unit | $413 | |
| Purchase Price | $120,000 | |
| Down Payment | $24,000 | |
| Reserves & Repairs | $22,268 | |
| Est. Closing Cost | $3,000 | |
| Loan Amount | $96,000 | |
| Rental Income | $1,652 | |
| Expenses | ||
| Mortgage | $756 | |
| Advertising | $10 | |
| Legal & Accounting | $20 | |
| Grounds Keeping | $80 | |
| Water/Sewer | $80 | |
| Gas & Electric | $30 | |
| Trash Collection | $60 | |
| Vacancies | $165 | |
| Tax & Insurance | $208 | |
| Management Co | $165 | |
| Maintenance | $300 | |
| Total Expenses | $1,875 | |
| Total Monthly Profit | $(223) | |
| Total Annual Profit | $(2,673) | |
| Paid Off Annual Profit | $(23,003) | |
| Interest Rate | 5.00% | |
| Years | 15 |