Real Estate Deal Analysis & Advice

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Madeline Sarad
  • Investor
  • Dallas, TX
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[Calc Review] Help me analyze this deal

Madeline Sarad
  • Investor
  • Dallas, TX
Posted Jul 21 2022, 12:59

View report

Short version: I am new to analysing deals - can you help vet my report here and tell me if this looks like a good deal? I think it does based on my limited understanding, but would love to validate that with experienced folks in this forum.

Longer version: Hi Team! I am a newbie to real estate investing. I have 1 mortgage already (about 260K left) for a condo that I have rented out to tenants. 

I am looking for my next deal and trying to find something that allows me to house hack & generate decent cash flow that I can put into more properties later (I also save from my W2 job - this would just be supplemental cash flow). My strategy for this was to look at multifamily properties where I can do short-term rentals (AirBnb etc) & house hack at the same time.

I found this quadruplex - each unit is 1 bed, 1 bath, in an amazing area of Dallas that has local attractions and is also 1 mile from a hospital (travel nurse market). It is fairly updated. I might just look at improving the flooring in the bathrooms, repainting the units white & changing out some fixtures (doorknobs etc)

I am new to analysing deals - can you help vet my report here and tell me if this looks like a good deal? I think it does based on my limited understanding, but would love to validate that with experienced folks in this forum. I think $1 million+ is a lot to pay in the Dallas market, but I'd be willing to pursue this if it generates cash flow and could help set me up well for additional deals. The location of this place could not be better. 

Thank you so much!! 

*This link comes directly from our calculators, based on information input by the member who posted.

Dallas, Texas

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Chad McMahan
  • Residential Real Estate Broker
  • Sedona, AZ
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Chad McMahan
  • Residential Real Estate Broker
  • Sedona, AZ
Replied Jul 21 2022, 15:25
Quote from @Madeline Sarad:

View report

Short version: I am new to analysing deals - can you help vet my report here and tell me if this looks like a good deal? I think it does based on my limited understanding, but would love to validate that with experienced folks in this forum.

Longer version: Hi Team! I am a newbie to real estate investing. I have 1 mortgage already (about 260K left) for a condo that I have rented out to tenants. 

I am looking for my next deal and trying to find something that allows me to house hack & generate decent cash flow that I can put into more properties later (I also save from my W2 job - this would just be supplemental cash flow). My strategy for this was to look at multifamily properties where I can do short-term rentals (AirBnb etc) & house hack at the same time.

I found this quadruplex - each unit is 1 bed, 1 bath, in an amazing area of Dallas that has local attractions and is also 1 mile from a hospital (travel nurse market). It is fairly updated. I might just look at improving the flooring in the bathrooms, repainting the units white & changing out some fixtures (doorknobs etc)

I am new to analysing deals - can you help vet my report here and tell me if this looks like a good deal? I think it does based on my limited understanding, but would love to validate that with experienced folks in this forum. I think $1 million+ is a lot to pay in the Dallas market, but I'd be willing to pursue this if it generates cash flow and could help set me up well for additional deals. The location of this place could not be better. 

Thank you so much!! 

*This link comes directly from our calculators, based on information input by the member who posted.

Madeline,
this looks good on paper. But a lot of times the calculator is not accurate. Especially since you are new to this, what does your STR/cash flow investment specialized realtor say?

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Scott Trench
  • President of BiggerPockets
  • Denver, CO
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Scott Trench
  • President of BiggerPockets
  • Denver, CO
Replied Jul 21 2022, 15:33

I agree that you should run these numbers by your realtor. The calculator should be accurate, but the outputs are only as good as the inputs.

At first blush:

- I’d assume 7-10% vacancy for the property 

- I’d assume 10%+ for property management. 

You can’t assume zero for either of those.

I don’t know the condition of the property but if it is good condition, those might be reasonable maintenance and capex expenses. If it is a fixer upper or old building, expect a lot more. 

- check your taxes and insurance numbers with a local expert.

Even with more conservative assumptions, I bet you have a chance at a deal with a 6%+ Cap rate (could be wrong let’s see what the analysis says). If so, that would be good in Denver - not sure about your area!

Good luck! Interested 

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Madeline Sarad
  • Investor
  • Dallas, TX
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Madeline Sarad
  • Investor
  • Dallas, TX
Replied Jul 21 2022, 15:36

Thanks so much for your response, Chad! I am awaiting his response and opinion on this deal as we speak :-) I will circle back once I know more.

I am not prepared to do a more intensive rehab etc and have been looking for something that doesn't need as much work. This property fits that criteria, though it's at a higher price point. In an absolute worst case scenario (ie - no renters at all for some unforeseen reason) I can float the mortgage amount on my own - it would slow down my saving for additional properties, but I wouldn't be in an impossible situation with no way out, if that makes sense. I think the chances of having to float this on my own are slim (solid location, consistent rental history, 100% occupied, other thriving Airbnbs in the area) but I like to prepare for the worst case.

Are there other downsides I should be considering at taking on this high of a loan amount early on? Even if I have short term renters in it - will it prevent me from getting additional primary residence loans in the future? I'm trying to do the "house hack for 1 year, find the next one and repeat" approach.

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Madeline Sarad
  • Investor
  • Dallas, TX
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Madeline Sarad
  • Investor
  • Dallas, TX
Replied Jul 21 2022, 15:39

Scott, thank you so much! I am really excited to be part of this community and to learn from folks like yourself. I appreciate your feedback and will take another look at the numbers.

Cheers,

Madeline