Is this a good deal?!

[Dung Nguyen]

Hi BP community!

I have submitted an offer for a three family in a pretty decent neighborhood. It is 3150 square feet, it has 8 bedrooms, three bathrooms, brand new siding, brand new roof, four off street parking spots, updated electrical, and all new windows. The first floor rent is below market price at $975, second unit is vacant, third floor rent is $800. Rent could go as high as $1200 for that area. The annual tax is $3750, the annual insurance is $1300, water and sewage is $200 per month, and basement washer and dryer takes coins.The work needed inside the units are mostly cosmetic where I can do some things myself and whatever else won't cost too much. I'm thinking less than 15k for all three units.  The asking price is 310k and I offered 340k with 8k back for closing costs. Is this a good deal and do you think I made a good decision? I ran all the numbers through the BP calculator multiple times and the numbers make sense. All feedback is welcomed. Thank you!

[Jon Kelly]

@Dung Nguyen Can you share your analysis? What is your CoC and cap rate? Does it meet your goals?

I see this so many times on BiggerPockets... people ask if something is a good deal without doing or sharing the full analysis. 

I like to analyze properties both ways (1) using their current, or previous 12-months, financials, and (2) using my projections. I tend to make decisions based off of the first analysis, or how the property is currently operating. You're adding another layer of risk when you analyze properties from your projections. For example, you suggest rent can go as high as $1,200, which is a 23% increase from the 1st floor and 50% increase from the 3rd floor. There may be a reason they aren't renting for $1,200. 

I don't know what the 2nd unit rent is, but let's assume $900. Total rent is $2,675, which doesn't come close to the 1% (or 2%) rule at $340k... 

The good news is it appears the big ticket items are updated, so you can likely make your maintenance and capex assumptions low.