Hello BP Members!
I'm trying to analyze a deal on a duplex 3/2 unit and 2/2 unit. The home was built in 1974 and needs some exterior work (not the kind that adds value to renting). It looks like it needs a new roof or significant roof repair as well as wood siding repair. What's the best way to estimate the cost? We are house hacking, so our return won't come from our renters alone, we will be fronting the cash.
The list price is $215k and rents in the area range from $900-$1300 I crunched the numbers and was thinking of presenting two different offers. One at full list with the roof repairs completed, and the other for 20k less and I would take care of the repairs myself.
Any thoughts? Have I analyzed this the wrong way?
|Purchase Price($)||$ 190,000.00|
|Monthly Rent($)||$ 1,150|
|30 Year Loan Rate(%)||4.50%|
|15 Year Loan Rate(%)||3.90%|
|Closing Costs($)||$ 11,400.00|
|Value (30-Year Mortgage Scenario)|
|Monthly Rent||$ 1,725|
|Annual Rent||$ 20,700.00|
|Value Per 2% Rule||$ 86,250|
|Value Difference (2% Rule)||$ (103,750)|
|Annual NOI||$ 13,800|
|CAP Rate (50% Rule)||7.3%|
|CAP Rate (Assumed Expenses)||6.0%|
|Annual Property Taxes||$ 3,420|
|Annual Maintenance||$ 2,070|
|Annual Insurance||$ 1,520|
|Property Upkeep/Other||$ 200|
|Property Management||$ 2,070|
|30-Year Mortgage Results|
|Money Down||$ 38,650.00|
|Monthly Gross Rent||$ 1,725.00|
|Monthly Loan Pmnt||$ 929.01|
|Effective Rental Income||$ 20,700.00|
|Annual Loan Pmnts||$ 11,148.09|
|Annual Expenses||$ 9,280.00|
|Total Expenses + Loans||$ 20,428.09|
|Annual Cash-Flow (Pre-Tax)||$ 271.91|
|Annual Return (Cash-Flow + Equity, Pre-Tax)||$ 3,229.76|
|Annual Post-Tax Cash-Flow (Pre-Tax)||$ 190.34|
@Spencer Wagner don't over complicate it.
Once it under contract and you are doing Due Diligence get quotes for the repairs and work you need to do.
The home inspection will come with some other small things that need to be looked at.
Check all the water heating and HVAC, and water pressure in the building.
see if you can locate the pressure regulator if you cant it could cost you $350 to find each and replace it.