I just bought a 2 family home with the following numbers;
Purchase price $70,000
Down payment 25%
Total cash paid: $26,000
2 family home, both occupied.
Rent collected : $1575
Total expenses (mortgage, utilities, taxes, vacancy, and repairs at 10%) : $810.
I will manage the property myself
Net cashflow: $768
Cash on cash return: 35%
Do you think this was a good deal, being that I am new to real estate investing?
GREAT deal! Numbers look solid. If they are older homes make sure to keep enough in reserves for roof, plumbing, HVAC, etc.
I don't know why you bought this property if you didn't know whether it was a good deal or not. Next time make sure it is a good buy before you buy.
A good buy would be one that meets your required return on investment and is selling below comps. Only you know that.
In that the individual components of operating expense are not available we can only guess. First, I am only interested in properties that sell at no more than 75 times estimated monthly rent. That meets my criteria but may not meet your. Your property exceeds my criteria.
If we estimate operating expenses at 50% of rent then we have $9,450 net operating income At a 10% cap rate that would equate to a value of $94,500. At a 12% rate the value would be $78,750.
Based on the information you gave this looks like a very good deal. Congratulations.
Good Luck in the future.
I would have asked this before you bought but it meets the 2% rule so I would have considered it.
What utilities do you pay? I would make sure the tenants are responsible for them and if you need to separate electric or water I would def do it. May have cost up front but it will pay for itself in no time.
I don't pay any utilities other than the garbage fee,which is $35\ month every quarter.
Looks very solid... I would advocate for separating out the expenses so we can make sure they pass the sniff test but the top level numbers look solid.
Why is your cash in so high? 25% of $70k would only be $17,500... where's the other $8,500 going??
Looks good to me as long as you won't be putting a roof, removing dead trees, replacing old mechanicals, etc. any time soon.
319‑213‑7458 | Podcast Guest on Show #110
Really its a great deal, I love to have this deal or want to buy the property which is given here in first investment home. It is definitely a great deal for investing in the real estate.
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