Is this a good Buy and Hold Deal?

14 Replies

Eastpointe, MI-48021

ARV: $72K

Asking Price: $52K

Repairs: $2.5K

Rent: $950 per month

What do you think?

The return on capital gains is low. If you're going for equity it's not worth it IMHO.

Assuming the taxes are under $2,000 a year and you can get good financing it would be a killer cashflow machine. Your cash on cash returns are between 30% and 60% depending on if you're doing conventional or a hard money lender. That's an incredible number for cashflow btw.

It depends. How much are the RE taxes? Do you pay for any HOA? What about the utilities - do you pay for any of them?

Use the attached Cashflow Analyzer everytime you present a deal. The answer is obvious based on the numbers. If I assume $1200 a year in taxes and you don't pay for any HOAs or any utilities, here's what the deal looks like:

It's not a bad deal at 11% cap. But then again...you did not provide the RE taxes and other info, so I don't really know the answer. Here's the link to the Cashflow Analyzer:

http://www.biggerpockets.com/files/user/Mister4closure/file/wendells-simple-cashflow-analyzer

The numbers say it is a good buy and hold. I would love those numbers where I invest. But everybody has a different idea of what level of finish a home needs to be brought up to before it is rent ready. Everybody has a different idea of what a good neighborhood is. Only somebody who knows Eastepointe knows how those numberes compare to others, rental demand, etc.

Thanks for the responses guy i appreciate it, they really helped me in making my decision .

Originally posted by @Bobby Jobs :
Eastpointe, MI-48021

ARV: $72K

Asking Price: $52K

Repairs: $2.5K

Rent: $950 per month

What do you think?

Hi Bobby,

This figures are very very solid.

We are buying very similar numbers in Ohio and know that the same can be found in Michigan.

We are just negotiating on a 4 bed, 2 bath in a great area. with the 2 next door properties selling to owner occupiers for $64,000 and $80,000.

We are looking to pick ours up for $15,000 and it needs a new roof, paint and plumbing.

Rent would be $800pm.

Thanks and have a great day.

Medium list n sell logo designEngelo Rumora, List'n Sell Realty | [email protected] | 419 740 6999 | https://agentscomefirst.com/ | Podcast Guest on Show #89

Originally posted by @Bobby Jobs :
Eastpointe, MI-48021

ARV: $72K

Asking Price: $52K

Repairs: $2.5K

Rent: $950 per month

What do you think?

950 in Eastpointe???????? 72k for an Eastpointe property? Eastpointe is going downhill fast. You need to get this as cheap as possible. What's the cross streets on this one? How close to 8 mile. You need to get farther away from 8 mile. Iknow that sounds rude and mean but that is just the way it is.

You could buy 2 properties in south Warren for 52K and bring in at least 1500 with them

I own a bunch of houses in Eastpointe. I would want at least 2.5% per month in rent. The highest I would go on that house is $38,000 to have it rent ready, assuming that the $950 per month is realistic.

I think you can find a better deal. I agree with @Scott K. . $72K in Eastpointe is very high.

Originally posted by @Rob K. :
I own a bunch of houses in Eastpointe. I would want at least 2.5% per month in rent. The highest I would go on that house is $38,000 to have it rent ready, assuming that the $950 per month is realistic.

I think you can find a better deal. I agree with @Scott K. . $72K in Eastpointe is very high.

your deals (purchases) are amazing in terms of numbers. i am always amazed by your numbers.

i am close to 100k rent ready for around $1200. but i have different caliber renters and houses.

@Wendell De Guzman I'm still a newbie but isn't the cap rate calculation in that spreadsheet wrong? From what I understand, cap rate is based on the property value, not your initial investment, so it should not vary when taking out the mortgage. What the spread sheet is computing as "cap rate" seems to be Cash-on-Cash return without factoring in the mortgage costs (and then CCR seems to correctly factor those in). Am I missing something?

@Bob Bowling , you are right - 11% cap does not by itself mean anything. It has to be taken into the context of what's going on in the market. The OP did not really provide enough information. The 11% calculation is only theoretical after making assumptions (read my reply again). Lastly, saying 11% cap is not bad - does not mean it's a good deal. It's just a starting point.

@Alex T. , you are correct - the spreadsheet was wrong. I need to upload the correct one. Thanks for pointing it out. Newbies are welcome to correct the veterans. We make mistakes too. :)