About to put first property under contract, quick check on the numbers!

3 Replies

Hey All,

I'm about to get my first rental property under contract here, and want to run the numbers quick and make sure I'm not missing anything major.

The property is a 3 bed/2 bath in a decent neighborhood. The price I'm getting it for is $73,500 on an ARV of $80,000. I'm also getting 2% toward closing from the seller. I'm expecting around $2500 in immediate repairs, otherwise this property is just coming off of having a long-term renter and is rent-ready.

Total Cash In: $18375 (25% down) + $1600 closing + $2500 repairs = $22375

Rent: $1000/month - this is very reasonable in my area.

Monthly Expenses:

Mortgage (4.625, no points): $283.42

Taxes: $92

Insurance: $57

Vacancy: $83.33

Repairs and CapEx: $150

Management Fee (the company I'm going with is 7.5%): $75

Total Expenses: $740.75

Monthly Cashflow: $259.25

Yearly Cashflow: $3111

Cash-on-cash: 13.84%

Cap Rate: 8.4%

Thoughts? Seems like a base-hit to me in the hot market I'm currently in...the seller is motivated as they just bought a resort.

Thanks!

Stephen

You're missing getting the property at 70% ARV or better. With that figured in you should get it at $56,000 less your repairs, for a total of $53,500. If the numbers are right and you don't mind risking depreciation in the market, you'll be okay. So plan on this being a long term hold.

Yeah, this is a long-term hold.  Thanks for the feedback!

There is slight negative equity which doesn't matter since it will be a rental.  Numbers look good for a rental.

Bill

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