Analyzing this deal: $53K for $750 rent
Greetings BP,
Currently have a property under contract that is a 3/1 on the skirts of an established town. Below are the numbers:
-Price: $53K
-Recently updated (before listing; turnkey property)
-"Zestimate" at $57K
-Sight unseen but trustworthy Turnkey company has brought it to me and ensured its solid
-Inspection this week to confirm condition
-Dwn Pmt: 15% down ($7,950)
-Mgt Rate: 5% fixed 30-year
-Estimating $2k for closing cost
-And another $1k for possible repairs following the inspection
-Rent market: $750/month ($800 could possibly be pulled too)
-2014 Taxes were $733 ($61/mth)
-Using the 50% rule I get $750/2= $375. Then minus the PITI I end up with $375-$242= $133 of cash flow.
-Estimating 8% for vacancy loss, 10% for PM, 10% for Taxes and Fees, and 22% for CAPEX…for a total of 50% of income.
-Total initial investment: $11k
-Projected Annual Rental income: $9k
-Projected Annual Expenses: $7.5k
-Projected Annual Cash Flow: $1.5k
-Property is in Indianapolis market just outside of Irvington (for those familiar with the area)
-3/1--1500sqft--additional 1000sqft unfinished basement--2-car garage--built in 1923
How solid of a deal is this property as a buy and hold?
Is their anything above that I am missing or need to adjust with the analyzation of this property?
And what should a young investor as myself focus on going forward with the inspection and closing?
Thanks for the advice!
Most Popular Reply
Double check your tax number. Indy taxes non-owner occupied at a higher rate than owner occupied. If your original estimate is based on an owner occupied rate, you may be unpleasantly surprised down the road.