Am I missing something?

5 Replies

Hi all,

I'm looking for a little help. I'm trying to get used to analyzing deals just so when I actually start looking I'll have a good idea of what to do.  I was wondering if I am missing anything on this specific unit because it seems that I'm coming up with some really good numbers and I feel I'm forgetting something. These numbers don't include repairs because the listing says it was rehabbed two years ago so for the sake of practice I assumed zero. Any feedback would be greatly appreciated. Thanks in advance.

Sale price: $99900

Down payment: $19980 (20%)

Closing costs: $1998 (2%)

Mortgage payment: 5% @ 30 years = $5148/year

Income:

Monthly rent: 1br - $600, 2br - $750, 3 br - $950 = $2300 ($27600/year)

Expenses:

Vacancy: $4692 (17%)

Property taxes: $3500 (listed as $3302 in 2012)

Insurance: $2000 (estimate)

PM: $2760 (10%)

Utilities: $2000 (estimate)

Reserves: $1932 (7%)

NOI: $10716

Cash Flow: $5568

COC: 25.33%

Cap Rate: 10.5%

Nice Breakdown.    

Decent Cap rate.   That's a high Vacancy though.   What are monthly operating expense?

Why such a high vacancy? If it is an harder area I would anticipate higher expense related to fixing it up.

@Gerald Harris  Elizabeth Colegrove  Thanks for the responses.

That high vacancy number comes from each unit being vacant for two months of the year.  I doubt that would happen but since I don't know the exact insurance and utilities amounts I figured if I'm low on those then the extra vacancy will cover them.

The listing says the tenant covers electric.  Heat is forced air.  

If you don't mind me asking, in terms of utilities what should one be looking for? Is there something that should raise a red flag?

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