Deal Analysis on SFR Buy and Hold

4 Replies

Here is my scenario: 

$37,500 purchase price

SFR - 4 bedroom 2 bathroom

$16000 Down payment and repairs. 

       DP $7500, CC $4500, Repairs $4000

Payment with Taxes and Insurance $286

Management = 10%

Repairs $50 monthly 

Cap Ex $100

Vacancy 8% = $116

Rent $1450

$1450-145-286-100-50-116= $753 Cash flow monthly. 

$753x12= $9036 NIO

Cash on Cash Return Estimated = $9036/$16000 = 56%

I'm not sure if "$41,500 house" and "$1,450/month rent on an SFR" go together, but it depends on the location. Around me (Kansas City), I'd have to spend something north of $150K on a SFR and repairs to get those kinds of rents.

I'm also not sure that $4,000 in repairs on a $37,500 house would be enough, but you have better knowledge of the property's condition.

@Christopher J Lemmon What area and/or neighborhood is this property in? Your scenario would be the first I have heard where you can rent a $37,500 property for $1450. Areas in KC where a less than 2,000 sqft property can lease out for this amount would be Brookside, Waldo, Plaza, Westport, P&L District (condos/apartments), Quality Hill / Hyde Park, etc. You can't buy a property for $37,500 that's livable in these areas.

We've found that a typical SFR for us costs about $8 to $12K for materials to put it in order with us providing all the work. I think your repair estimate is not enough...