Hey gang, considering this 3/2 in Sanford, NC. Looking to do an advanced cosmetic/partial mechanical rehab on it.

Here are the details:

• Beds: 3 Bed
• Baths: 2 Full Bath
• House Size: 1,634 Sq Ft
• Property Type: Single Family Home
• Year Built: 1964
• List Price: $39,500

Plan going in -
#1 - Buy & Hold
#2 - Resell for profit
#3 - Lease option

FARV (Fast Sell After Repair Value) $110,000

Going to offer $25,000, looking to get it for $30,000

Estimating $40,000 in repairs (roof, siding, HVAC etc)

Total project cost $70,000

Down payment $21,000 (30%)

Expected Rents $900 (Based on numbers from Zilpsy, Rentometer, Zillow and test Craigslist ads)

Breakdown of monthly expenses -

Total operating expenses: $380.00

Mortgage expenses: $278.22

Repairs: $90.00

CapEx: $90.00

Insurance: $60.00

Management: $90.00

Monthly P&I: $278.22

Property Taxes: $50.00

Total Monthly Income:$900.00

x50% for Expenses:

$450.00

Monthly Payment/Interest Payment:

$278.22

Total Monthly Cashflow using 50% Rule:

$171.78

Looks like almost a 9% Cap Rate, and 12% ROI. I'd like the Cap Rate to be higher, but the rents are low in our neck of the woods. Please tell me what you think, all feedback welcome!

Thank you!

Originally posted by @Kerry Smith :
Hey gang, considering this 3/2 in Sanford, NC. Looking to do an advanced cosmetic/partial mechanical rehab on it.
Here are the details:

• Beds: 3 Bed
• Baths: 2 Full Bath
• House Size: 1,634 Sq Ft
• Property Type: Single Family Home
• Year Built: 1964
• List Price: $39,500

Plan going in -
#1 - Buy & Hold
#2 - Resell for profit
#3 - Lease option

FARV (Fast Sell After Repair Value) $110,000

Going to offer $25,000, looking to get it for $30,000

Estimating $40,000 in repairs (roof, siding, HVAC etc)

Total project cost $70,000

Down payment $21,000 (30%)

Expected Rents $900 (Based on numbers from Zilpsy, Rentometer, Zillow and test Craigslist ads)

Breakdown of monthly expenses -

Total operating expenses: $380.00

Mortgage expenses: $278.22

Repairs: $90.00

CapEx: $90.00

Insurance: $60.00

Management: $90.00

Monthly P&I: $278.22

Property Taxes: $50.00

Total Monthly Income:$900.00

x50% for Expenses:

$450.00

Monthly Payment/Interest Payment:

$278.22

Total Monthly Cashflow using 50% Rule:

$171.78

Looks like almost a 9% Cap Rate, and 12% ROI. I'd like the Cap Rate to be higher, but the rents are low in our neck of the woods. Please tell me what you think, all feedback welcome!

Thank you!

How did you calculate your cap rate and why? If you'd wanted a higher cap rate than 9% (why would you?) why didn't you offer less? That would have given you a higher cap rate if that was your goal.

If you can get a property for $70K with a quick sell for $110K, make $40K less sales costs profit and pay the IRS 30%, that is a plan.

I find it depends on your need for liquidity and real world rehab experience. There's always more hidden costs.

Report on this thread real numbers. I'd love to hear it!

I agree with you @Brian Gibbons

We could definitely use the bump in capital to fuel future investments. I will keep you guys updated. We are submitting out offer today.