First Deal analysis help! Used the BP Rent Calculator

3 Replies

Here are the numbers I have running through the calculations.  I would appreciate any analysis help or any tips on how I might have erred.  I tried to be conservative.

Purchase Price: $45,000.00

Purchase Closing Costs: $3,000.00

Estimated Repair Costs: $5,000.00

Total Cost of Project: $53,000.00

After Repair Value $50,000.00

Down Payment: $9,000.00 

Loan Amount: $36,000.00 

Amortized Over: 30 years

 Loan Interest Rate: 5.00%

 Monthly P&I:$193.26

Rent $700.00 

Total Income $700.00

 Vacancy $70.00

CapEx $70.00

Property Taxes $51.08

 Repairs  $70.00

P&I 193.26

Total expenses $454.34

Monthly Income: $700.00
Monthly Expenses: $454.34
Monthly Cash Flow: $245.66
Pro Forma Cap Rate:

9.94%

Purchase Cap Rate

11.70%


NOI $5,267.00
Total Cash Needed $17,000.00
Cash on Cash ROI 17.34%
  

2 expenses that are missing are insurance and property management. Even if you're planning to manage them yourselves, it's a good idea to still account for PM. 

FYI, your 10% budget for capex is for building reserves and isn't an expense that hurts your NOI. So, assuming you budget something for insurance (e.g. $600/yr), PM (10%), and book capex (10%) against NOI and not as an operating expense, I get the following numbers.

NOI: $4751
CF: $133/mo
COC: 9.4%

Originally posted by @O'brian R. :

2 expenses that are missing are insurance and property management. Even if you're planning to manage them yourselves, it's a good idea to still account for PM. 

FYI, your 10% budget for capex is for building reserves and isn't an expense that hurts your NOI. So, assuming you budget something for insurance (e.g. $600/yr), PM (10%), and book capex (10%) against NOI and not as an operating expense, I get the following numbers.

NOI: $4751
CF: $133/mo
COC: 9.4%

 Thanks!  That's very helpful. Is this a deal you would feel comfortable going for?

The numbers certainly warrant looking into further, but they're still only part of the story. There's a slew of other factors that can impact your rental such as the demographics, property type, size, age, etc. Does it fit your criteria for what you're looking for in terms of the location, crime, schools, etc? These factors will heavily influence the tenant class that your property will be attracting. If these are all in line with what your goals are for the property and you're happy with the estimated returns, then that'd be another green light for me to proceed. 

BY the way, how was the repair estimate derived?

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