Analyze my first deal!

5 Replies

Hi everyone,

So I am about to close my first deal next week. I would love to hear your thoughts on the deal. The property is a four unit building that I am purchasing for $195,000 with 20% down. I used a cash out refi and a HELOC to get the money for the down payment, so I am already being pretty creative to get this done. I calculated all of my costs, and it appears that the place should cash flow to the tune of $800-900 per month after paying the mortgage, taxes, insurance and bills.

The place is going to need some "sweat equity". I have a long list of items to repair from the town inspection, but I shouldn't have to put more than $5,000 into the place to get past the inspection. The worst item long term is that the seller had the roof replaced without replacing the skylights. I will definitely be fixing that right away! I also will probably have to do some updating to kitchens and bathrooms in two of the units down the line, but I am handy enough to do them myself.

The best part about the place is that I am buying the least expensive four unit that has sold this year (no comps to be found!) and that the rents are all under market value. One unit is at least $150 under the market price!

Let me know what you all think!

Medium second city real estate logo   white close upJohn Warren, Second City Real Estate | [email protected] | 847‑894‑2433

Looks pretty good. When you ran your financial analysis did you factor in vacancy and some % of rents going towards capex for the future? A lot of investors miss those two items and it ends up hurting their cashflow in the future.

Good luck!

Thanks for the ideas! The vacancies in this area are pretty low, but you are right that I will need to start saving for some expenses down the road. I am probably going to just save all the extra money for the first year anyway as I don't need the cash flow to live. 

Medium second city real estate logo   white close upJohn Warren, Second City Real Estate | [email protected] | 847‑894‑2433

@John Warren click on the analyze tab and use the rental property calculator.  If you didn't factor in maintenance and vacancy (10% and 5% is typical rule of thumb) you may be missing a few other expenses which are over estimating your cash flow. 

The calculator has everything listed for you to input.

Congrats and good luck

@John Warren

As Jeff said, I would definitely put your numbers into the BP calculator. It's a great start, just know once you get in there and own the building, don't expect the same numbers you saw on paper. 

2148649796

If you give me some cross streets where the property is located I can give you a complete picture (free) of all numbers and data included (rents, valuation, vacancy, appreciation, ROI/CCR)