[Calc Review] Help me analyze this Phoenix AZ Townhouse

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Hi Everyone,

I'd love some feedback on this deal. The sellers just countered at 90k and I'm not sure if I should accept it. This would be my first deal. It's cash only so I have to use hard money to get it. Current tenant is paying 940 a month until March 2019. I would have to spend roughly 5k to get it ready to rent after that and then would refinance it to a conventional 30 year mortgage with 20% down. Any thoughts would be awesome!

Hey Chris,

Congrats on taking action. With this, I believe you would need to give some more information. Forgive me for bombarding you with questions below:

What's the ARV?

Is there an HOA amount?

Who pays utilities? If it's you, what are those amounts? 

Will there be a property manager or is it you that will manage?

What are your hard money + holding costs? Don't forget these because some banks won't refi until you have a proper seasoning period. 

What are the closing costs for both the home and then the refinance?

What are the annual property tax and insurance costs? Will these be included in the loan?

Factor in the above because every dollar counts. Based off a loan amount of $78,400 at 6% interest and Annual Property Tax of $1,280 and Insurance $750, your payment would be approximately $639.21

Factor in 20% percent for vacancy, repairs, and property manager fees and your left with $752 for a profit of $112.79. 

Strongly suggest you to use the BiggerPockets Calculator as well as look into Lease Options as that might be another exit strategy to save on the repair, hoa, property manager costs.

Apologies in advance for the novel. Best of Luck! 

Originally posted by @Derek Janssen :

Meets the 1% rule. What's the HOA dues? Are there any assessments coming soon? What are the property taxes?

The HOA is 127.50 a month (lower than most HOA's in this area) and it covers Exterior Mnt of Unit; Roof Repair; Roof Replacement; Blanket Ins Policy; Garbage Collection; Common Area Maint; Street Maint. Taxes are $296 for 2018. I included a link above my original post to view all the details if you want to look there also.

Always include the cost of Property Manager whether its you or someone else.   Once you add this in, its a looser.  PM will take 1/2 of first months rent and then 10% every month. 

@Jim Adrian I would be managing it myself but good point to pay myself for doing it. I think I'll pass on it. A similar one next door just hit the market this morning for 12k less so I'm going to write an offer on that one :) Thanks for the feedback!