Will someone review this deal for me?

5 Replies

Hi Bigger Pockets community,

Could I run some numbers past you just to see if I'm on the right track with this property? This is a duplex (recently illegally converted from a single family) - but that's another story...

Purchase price:  $95,000

Assessed value:  $147,500

Renovation/Repairs:  $25,000

Taxes: 2650 annually

Insurance:  900 annually

80% LTV loan, $118,600 at 4.75% (includes renovation expense) Based on assessed value.

I anticipate $2300 in acquisition costs and $2736 in holding costs before it is rented.

Rents:  Unit 1-$750  Unit 2-$600

I have no personally money in and a cap rate of 10% (if I calculated correctly)

If you could take a quick look I'd really appreciate it!

Thanks, Jamison

No personal money in and 10 %cap rate. I say got for it  No real loss if deal went  south 

How are you funding this?  

It looks like you are using the assessed value as the appraisal value?  Even if it were to appraise for 147K, you couldn't borrow on that until the property has "seasoned".

If you get an investment loan with 25% down you are looking at needing 53.75K of your own money to do this deal.

Jesse - The 80% loan is from a commercial lender at a regional bank.  They lend up to 80% of assessed value to established investors.  The $7000 or so more that I would need is coming from equity in another property I own (or perhaps my own funds)

There are no seasoning requirement for purchasing this property.  I have know property seasoning to be in reference to refinancing?

I'm in process of getting the property appraised.  In the rare chance appraisal will come back lower than assessed I'll renegotiate with seller.

Thanks for your vote of confidence Rotimi.  

Assuming that the property would be worth $147,500 after fix up  or it can rented for $1,350 per month it would be worth about $75,000 to me.  If it is worth that without fix up you are getting a good deal.

Good Luck.

Bill