The property is on the west side of Indianapolis off of 10th and girls school rd. I plan to rehab, refi, and rent it for 3 to 5 years and then sell.
Purchase price is 77k
ARV is 115k
Loan costs 5k
After refi I should only have about 9k left in the deal
Cash flow after mortgage and expenses should be a little more than $200 per month
I am having a little analysis paralysis on this and would like some advice if I should proceed with deal as is.
@Seth Greiner I don't know your whole analysis as far as how you got to these numbers, but if the all in amount is about $9k (after re-fi) and you can make $200/mo in cash flow, that's COC of about 25%. Based off that I think it's a pretty good deal. I'd be happy to examine further with loan terms and things of that nature.
Are you factoring in any vacancy and maintenance. This looks to be a pretty mediocre deal because you seem to be counting on the appraisal coming in at 115k, but it may not work that way. You may end up having to put more cash on the table if it appraises lower - there is a good deal of risk here.
@Larry Fried @Rodney Kuhl
Thanks for the responses Larry and Rodney.
Rodney- basically I would be relying on 75% of the appraisal amount of after repair (about 86k) in order to put the least amount of cash down. I am expecting a 5% loan for 30 years, don't think this should be a problem.
Assumptions are : 1100 rent - 45 vacancy -130 taxes - 55 insurance - 100 repairs and cap ex -110 management (will be self managing but I like to add this in)- 460 loan= 200 cash flow
Larry - I was factoring on all the numbers (perhaps a little low but that is part of what I am asking). You are right in the fact that a lot of the deal depends on the appraisal, it is probably my biggest worry on it. I am not bothered by bringing more cash but I don't like that it makes the deal worse.
@Seth Greiner - what's the accessed tax value? It looks like your tax allocation maybe low. Don't forget you will be charged 2% of the assessed value for non owner occupied.
Also, that price sounds like it's right at full ARV or retail. I don't know about your, but I hate paying retail for anything...
IMHO-I'd rather have 2 Eagledale homes that cost $60k each and rent for $750 than the one $115k asset.
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