[Calc Review] Help me analyze this deal

6 Replies

Hi BPers,

Im in Utah market right now where it is very hot and we like this property due to its great location in salt lake county. I know the cash flow doesnt quite make sense now and the COC but we are asvised that the rental rate can potentially go up. Can you please help me see if it makes sense?


If your estimates are correct and your strategy is to keep this as a long-term hold for rental income, I don't see how it makes sense.  You'll be losing money, basically until year 5.  You will be well on your way toward year 10, before you can sell, based upon the projections you provided.  And, you're tying up $75k in liquidity.

My personal recommendation would be to look at lower cost properties, if you're looking to get into long-term hold/rentals.  This deal would make even less sense as a flip.

Does not seem like anyting I would get involved with. WAY too many deals out ther to deal with this unless it is a walgreens of some other Rockstar tenant! 

Just my 2 cents

Thank you Hattie. Appreciate the insight! We are just speculating on the upward moving of this market because the house price keeps rising and there are organic factors that support it so in a moment we think negative cash flow can gradually be covered by picked up rising rental rate, but i guess its not financially sound on this deal..,

I would only purchase a property for what it is not what it can be because that will be your job to change it. Speculating on the market could get you in trouble and its a factor of risk that you cant control. Dont bet on the market, bet on a variable you can control like property management, proper maintenance, well screened tenants, etc.

Thank you Rob and Nathan!. Very helpful viewpoints, been struggling so much since I personally really favor the location, I guess the numbers don’t make sense therefore might not be the best fit.

Btw glad to connect Nathan! Are you also looking in this area or else where and whats your strategy?