[Calc Review] Help me analyze this deal

[Estefania Navas]

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

[Tim Herman]

@Estefania Navas You won't insure two houses for $60 per month unless they are the fire station. Unless you have a quote and only insuring for cash value, mine runs around $75 per month per house. Certain states it is a little more. If you suffer greater than 50% loss you will be required to update to present code and that cost will be more than the property is worth, and most likely the insurance company will get you the percentage of loss and you will have to foot the bill for the update.

Here is a simple repair budget. Turnover cost + number of service calls over a timespan. Using 1 turnover per year and 1 repair a year. So for 4 years you can get by with a refresh by a handyman and cleaner. The 5th year you most likely will have to repaint the complete house. Assume a quick turnover costs $500 and a complete refresh  is $1500. 1 service call per year @ $150. Your 5 year cost is 4*$500+1*$1500+5*$150=$4250/60= $71 per house per month. That is with made up numbers. Your costs could be greater.

Capex budget will be similar. Since you didn't specify the size other than 2/2 I will make some assumptions. Assume 1500 sf of flooring. My area cost me $6 sf to replace. Go to your favorite flooring store and ask what the commercial warranty is: 10 years or less(5 years for carpets). That is your lifespan. $9000/120 months=$75 per month for 1 item in a capex budget. This would allow you to do both house floors. Still have to save for roofs, appliances, hot water heaters, hvac, exterior, sidewalks, window, remodels, etc. Percentages do not tell the story. They give you a chance to find some properties that you can do a deeper dive. With this much income for the price it will probably cash flow just not as much as you are expecting.