1st Deal Analysis

[Ron J.]

New to the site and want to share the numbers on my 1st rental in Philadelphia.

3 bedroom 1 bath Row Home

Cash Purchase price after closing - 19,500

Rehab costs - 13,500

Total investment - 33k

Appraised Value after rehab - 44k

Cash out refinance - 33k at 4.12% 15 year fixed

Rent yearly (section 8) - 11,160

Mortgage & taxes yearly - 3,732

Insurance yearly - 1,080

Any opinions on how these numbers will hold up in the long run? Currently rented in a 2 year lease. Rent at 930 per month, $923 guaranteed from the housing authority, tenant pays $7 per month. 

[Michael Noto]

@Ron J. Some quick thoughts

• Who will be managing the property?  I didn't see that accounted for in your numbers.  Even though you may start off managing it I would still account for management in your initial numbers in case your situation changes down the road.
• Also, you can pretty much count on not getting that $7 per month from the tenant.  That has been my experience at least with section 8 tenants.  On the other hand if the tenant does actually pay the $7 per month that is a real good sign.