Looking for Feedback on my Analysis

2 Replies

Hey everyone! First time poster, first time investor here in Frederick, MD. I'm working on getting the fundamentals down, and I ran an analysis of a property that I'd like to get some feedback on. This property would be a Buy and Hold!

Here's the property -- http://www.brightmlshomes.com/homes-for-sale/5-W-7...

I ran some numbers through the BP Rental calculator based on the following information:

Purchase Price: $140,000
Loan amount: $112,000 (20% down)
Tax and Insurance are listed on the website showcasing the property.
Amount for repairs: $25,000.

Monthly income: $1650, based on similar properties https://frederick.craigslist.org/search/apa?search...

Vacancy Rate: 8%. This one I just guessed on. Where do you folks find the vacancy rate for your area? Is that something through public records? I did a few searches online and the most recent stat I could find was from 2016.

Average Cap Rate for the area: 5%. Again, is there some way to track this? That's just a low estimation.

Water and Sewer / Electric bills I got from the county website and from the area's electric company respectively. I live in the area so I have a relatively concise idea of what these will be.

Capital Expenditures: 2%. This is another thing that I know could be anyone's guess, and is definitely unique to each property, but I'm planning on that $25,000 attacking the initial problems that a house from 1920 will have (wiring, roof probably, windows, floor). I guessed at 2% afterwards but I'm getting the feeling that that's low.

Expense / Value / Income increases: I kept these low, between 1% and 3%. I'd assume there's a way to historically analyze property values over time in the area, but I'm still struggling where to find this "bulk" information.


Anyways, the actual stats and breakdown are in the images attached. I'd like to know how accurate / inaccurate this analysis is, and what areas I need to give more attention in the future.  Thanks in advance guys!



@Mike Reese , great job crunching those numbers... Here are my thoughts.

1. Assuming that the structure and MEH are in decent shape, the property is priced very well.  So trying to knock 30K off the list price will be difficult especially since it looks move-in ready from the photos.

2. Again, judging by the photos, I don't see the place needing 25K worth of rehab, unless you were thinking of adding additional sq ft or bathroom(s) to increase the overall value of the property.

3. increase both cap ex and repairs to 5%.

4. vacancy of 8 to 10% is the range that I typically use. 

5. I see that you have 10% for Property mgmt... good job.

6. I would look for better loan interest rate. 5 to 6% from local banks.

7. You might want to take another look at the property tax... the total (city+county) tax should be closer to 2.8k/year.

8. Assuming 0% appreciation, the target ROI and cash flow is not that exciting.

good luck!

-V

Thanks a ton man! I really appreciate the breakdown, I'll be sure to adjust my other analyses accordingly!

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