Analyze SFH rental deal in Houston - Good enough for starter?

5 Replies

Hello BP nation!

I am working on a deal for my first rental property right now. Please help take a look if the numbers make sense. This is a SFH deal.

Offer Price: $110,000

LTV 75% with 4.75% interest.

Amount I put down: $27,500

Loan Amount: $82,500

Rent comps from Agent/Zillow/Hotpads: $1,250 

The following are expenses :

Insurance: $1,500

Vacancy: 10% - $1,500

Maintenance/Repair: 10% of annual income - $1,500

PM: 8% (will be doing this myself but included just incase) - $1,080

HOA: 350

TAX: $2,600

Improvement: $5,000 (minor but needed to bring up standard for rent income)

Closing Costs: Estimate at 4.5% ($4950)

Cashflow: $1,246 

NOI: $7,710

CCR: 3.33%

Not sure if this is too conservative but do cashflow $104/month. 

Thank you for your time. 

Excluding vacancy, maintenance, and PM you're at ~14.5%. You can find 20% or more in many areas around Houston. It's positive cash flow, but you should aim higher.

Thanks @Doug McLeod  , 

This is a bit more average deal from the dozen that I've looked at recently. I am exploring rural locations but not sure about vacancy and rent rate compare to more active but competitive areas around Houston. Anyhow, good deals take time but thought that this maybe a good start. 

Agent advised not to lower current offer price due to hot location but will have to see about that. 

Personally I wouldn't take that deal not enough cash flow. But if you're comfortable with that and it works with your strategy then go for it. I'm not familiar with that area but I think you can do better. On a property of that amount closing costs would be close to 9000, that is in my area though.

:

Hi @Eric T.  ,

I definitely you can find something better here in Houston. I myself am finding deals over 20% all the time. 

Let me know if you have any questions.

Thanks,

Andres J.

Thanks @Tariq B.  and @Andres Jaramillo  

Your feedbacks pretty much confirmed that will need to work harder for the right deal. Will keep on looking and learn more from other local investors. 

Thanks for your time. 

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