Is this a good Buy and Hold Deal?

Question

Eastpointe, MI-48021

ARV: $72K

Asking Price: $52K

Repairs: $2.5K

Rent: $950 per month

What do you think?

Alex T. · Answer

Account Closed 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?

Wendell De Guzman · Answer

@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.

George P. · Answer

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 · Answer

Here's the corrected cashflow analyzer link: http://beta.biggerpockets.com/files/user/Mister4cl...

Wendell De Guzman · Answer

@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. :)

Account Closed · Answer

How can you say it's not a bad deal at 11% cap? What if the market cap rate range was 13-15%? How would you even be able to get reliable cap rate comps on SFR's?

Rob K. · Answer

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.

George P. · Answer

i guess you didn't believe me when i replied to your other thread.

http://www.biggerpockets.com/forums/88/topics/131212-is-this-a-good-deal?page=1#p865820

:)

Scott K. · Answer

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

Engelo Rumora · Answer

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.

Is this a good Buy and Hold Deal?

Is this a good Buy and Hold Deal?

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