Condo analysis in Orem, Utah

[Tanner Morrill]

So I (a newbie) checked out today a condo listed on the MLS (#1321480) and I want to see if I'm analyzing this correctly. Here are basics:

List price (assumed purchase price): $114,900 with 20%down on conventional loan at 5% and minimum monthly payments of $493.45.

Gross max rent (estimated): $1000/mo or $12000/yr with 5% vacancy rate. 

Operating Expenses:

HOA fee: $1080/yr

Taxes: $609

Insurance (guess): $600/yr

Maintenance: $1500/yr

Property management (educated guess): $960/yr

TOTAL OP. EXPENSES: $4,749/YR

RRA: $200/yr and debt service at $5921.36

NET OP. EXPENSES: $6651

BTCF: $529.64

CAP: 5.79% (pretty bad!)

COCR: 1.96% (pathetic)

Debt/coverage ratio: 1.12

50% rule: ($221.36)

1% rule: ($149) 

IRR: 43.7% (pretty good, right?)

To get good cap & COCR rates above 10% I need to buy this place for $60k, right? Did I miss anything? Do your numbers agree with mine? Thanks!!!

[Jeff Rappaport]

Tanner, I think you conducted a pretty good analysis on the property. The 5.79% cap rate is about the norm in SLC. I have never found condos to be good rentals. The HOA always gets in the way of cashflow. If you are looking for good income property and would be willing to look out of state we should chat. You mentioned the 1% rule. I have a number of income properties that all beat the 1% rule. Good luck!