Do these numbers work?

8 Replies

On a multi family (2 unit) for 60k cost

Cost Analysis Performed as Rental Property
Rent - $16,500.00

(Annual) Actual Taxes - $861.00
(Annual) Estimated Insurance - $1,322.00
(Annual) Property Management (Optional) - $1,320.00
(Annual) Estimated Utilities/Lawn/Misc - $1,320.00
Total Costs - $4,823.00

Net: $11,677.00

First, I never use the words "estimated" for expenses...or they will turn into costs since they are not defined.

Second, how are you buying/rehabbing this?  That's either:

1 - financed money, which means it will reduce your CF, 

2 - cash, which starts you off in the hole, or...

3 - a combo of the two...which does both reduces CF and puts a little less in the hole to start.

Yeah I also think you're missing expenses, and like Joe said, you're not calculating the cost of capital.

How it's financed makes a huge difference.

What about vacancy, capEx, maintenance? 

Does the property need any Rehab? what about closing costs?

$16.5k income on 60k is 2.33% rent/price which is FANTASTIC if accurate, but rare, so it's important to be sure and not rationalize out of emotion. 

will be buying cash. 

Thanks for the quick reply Alexander. I do need to find out about whether it is fully rehabbed. I will find out and reply. Thanks for the advice.

What is wrong with the property that the owner is willing to sell $16,500 rents for only $60,000 or 3.6 GRM?

5-6k as per the TK company to be rent ready. They say its partially renovated.

If it rented already you may have no time to make an offer :))) I could not imagine such kind of numbers sitting on the market few days waiting for out advice :))) if it is rented in bad area - find property manager If it is not rented and sitting in the market - it could have a major problem - explore it and adjust your offer

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