Help double check my numbers on, my first property... make sense property?

4 Replies

Hi BP, 

I am a newbie.  This is my first property.  I have found a  townhome , 3 bedrooms 1.5 baths  that I just put an offer  and awaiting seller's response.  This is the breakdown..

Asking price  72000         Down payment 14400      Closing costs 3000

Repairs 5000 ARV 88000

Taxes 1000               Insurance 800    

Interest rate 5 %         Amortization - 30 years    

  Expenses

 P & I - 309            Vacancies 30            Repairs 48              Cap . Ex 76     Taxes    83

  Management     95

 Going rent  950- 1000  - low ball 950 is what I am working with

I  will be managing this property myself but did the math including a property manager..

HOA - none

What is a reasonable COC rate to expect? I am getting 12.8%

What is reasonable cashflow to expect?  I am getting 250  from my calculation 

Monthly expenses  700  

Please help not sure if numbers are right and what is reasonable. 

Any help / input is greatly appreciated.  

Are you planning to pay full price?

Vacancy seems a little low at 3%

Are you paying any utilities?

Owners often pay the water bill because if the tenants are responsible for the water bill and don't pay it, the cost of the water bill is added to the property tax bill.

Still looks like a decent deal, but not great.

Best of success!

I think your vacancy factor and maintenance factor appear low. Take your yearly estimated gross rental income and figure about 5-8% (one month or slightly less) if you have a strong rental market and your property will perform well. I also use about 10% of gross rents for maintenance estimates per year. It is easy to spend that when you turn over a tenant. If you don't spend it, your returns will be higher than anticipated. These figures may be a little more realistic. Plug those in and see how your estimates for NOI look. Also, once you have NOI, you can use your financing figures to estimate cash flow and also calculate COC more accurately. If you don't have Gallinelli's book on calculating cash flow and other financial metrics buy a copy.

@Johann Kleisch

Thank you for feed back.  And yes will be paying $72K low from $75 K if I choose to proceed.  Tenant pays the water bill as well as other utilities. Yeah, I will need to go up on the vacancy rate and see what the numbers look like.  I factored in property management at 10% even though I will be managing the property so this somewhat evens out the low vacancy rate.   Generally this area rents quite well but I am learning that I should  take the conservative end when factoring the math as you and others have pointed out.  Thanks again for input!

@John Thedford

I think your vacancy factor and maintenance factor appear low. Take your yearly estimated gross rental income and figure about 5-8% (one month or slightly less) if you have a strong rental market and your property will perform well. I also use about 10% of gross rents for maintenance estimates per year. It is easy to spend that when you turn over a tenant. If you don't spend it, your returns will be higher than anticipated. These figures may be a little more realistic. Plug those in and see how your estimates for NOI look. Also, once you have NOI, you can use your financing figures to estimate cash flow and also calculate COC more accurately. If you don't have Gallinelli's book on calculating cash flow and other financial metrics buy a copy.

Thank your for your input as well as the book recommendation.  That sounds like a great resource to have as I am new to the industry.  Will definitely check it out. You and Johnnah (other responder) both suggested that I  increase my expense percentages to be on the safe side.  It may not be a deal afterall.  So let me check out.  Appreciate feedback.