Analyzing deals in Jax

6 Replies

Hey folks, I've been practicing analyzing deals, and I went through a few in Jacksonville. I found something interesting, and I'm almost positive there must be a crime issue or other external factor I'm not considering.

There's a listing on MLS, 83 days old. 115k for a Duplex, 3/1 each side. Both units currently rented month-to-month at $750/mo. Math works out to 21% Cash-on-cash return (see work below).

It's in 32209, so it looks like it has a high crime rate, and there's bars on the windows in the pictures. Curious if it's solely due to crime that it's being avoided, and how crime risk factors into folks' calculations?

Rent $1,500.00
Laundry
Storage
Misc
Total $1,500.00
Tax $75.50
Insurance $43.00
Electric $0.00
Gas $0.00
Water $0.00
Vacancy $75.00
Repairs $75.00
CapEx $75.00
Property Management $150.00
Mortgage $429.00
Total $922.50
Monthly Cash Flow $577.50
List Price $115,000.00
Purchase Price $115,000.00
Down Payment $23,000.00
Closing Costs $5,000.00
Rehab budget $5,000.00
Miscellaneous other $0.00
Total Investment $33,000.00
Cash on Cash Return 21.00%

Hey @Jon Roes, the 50% rule for expenses, excluding P & I is generally a good rule of thumb. However - higher crime/lower income areas are going to push your maintenance, PM, vacancy and possibly capex numbers higher. It's harder to find qualified tenants, you tend to have more evictions and because folks aren't as invested in the care of the property, higher maintenance and capex.

If you want to find out why it's sitting on a market, I'd talk to a local PM and ask what they think about that area.

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I wouldn't invest in 32209 personally due to the area, then again I generally invest in neighborhoods I would be willing to live myself. I recommend asking property managers if they would manage properties in that area, it gives you a good guide. Up to you but if a deal looks too "easy" is on the MLS in a hot market and hasn't been sold for more than the city average number of days on market I would be cautious.

high CoC return, but high turnover, expect to spend at least a few grand per turn, so have to figure that into the number and the headaches that comes w the turnover volume, but investors do it all the time in this zip and similar ones, the DOM may be due to conditions related to the property/neighborhood that you can't tell from just looking at the pics, you'd need a local expert w boots on the ground to fill in the blanks to complete the story

@Jon Roes I just invested in a multi-family property in Jacksonville a few months ago. There is an excellent research and forecast report that was created by Colliers International on Jacksonville stats. Happy to share. Best of luck! 

@Jon Roes

32209 is basically a hell-hole...regardless I invest in it, because I am local...I would NEVER recommend this zipcode to out of state investors that utilize property management.