Help Analyze my deal

7 Replies

Hello BP,

I am very anxious to get my real estate career started! I have been focusing on buy and holds out of state for the sheer fact it is super expensive in San Francisco. I also have connections in other states with people I can trust so that doesn't scare me. Anyway during my day job an opportunity came up and we have analyzed the deal over and over and think its a win. I would like to get your opinions on what you think and how we have structured the deal. Just FYI this is a tough one for us because we can't qualify for a loan of this amount with our salaries. The only option we can think of is the find an investor to help with the 25% down. 

Anyway let me know what you think and we would love to hear your opinions/constructive criticism

Your repairs are 1% and CAPEX is 0.5%. I think that may be a little low, even though it is a condo and the HOA takes care of the outside.

Also, you did not put property management costs.  Even though you are managing it yourself, it would be a good idea to include it.

I am so glad that I'm not in CA.... You have to put down 190k to earn less than $700/month in cash flow. I know there's a lot more factors to be considered, but WOW! 

I'm looking at less than 40k properties that, with a mortgage (10k cash required), that produce $300/month cash flow. 

To answer your question, your numbers seem fine. I would consider budgeting for property management, even though you are doing it yourself. 

Thanks guys, I'll work those numbers into it but I'm not even looking for cash flow now. With the way the San Francisco market is going the condo could be worth 900k in 12 months. I guess what we're asking is, is this deal to risky for a first time buy and hold? I've read you shouldn't bank on appreciation but in my eyes San Francisco is the closest city for a sure thing

@Christopher Adams - very nice location and hope the deal works out for you!

A few thoughts that came to mind. Since you will be looking for specific tenants and in a higher rent price point, it may take longer than you expect to get the place rented out. Have you done any research on how fast condos in this building are getting rented or what to put into the place to attract the tenants you want?  I rent out a 1br by daly city bart station and recently had a tenant change over. No problem finding new tenants, but rent is half of yours. 

I assume this condo comes with a parking space?

Renovation timeline -- three weeks. I'm not sure how extensive your kitchen and bathroom reno will be, but three weeks may be too optimistic. I think I heard somewhere -- whatever you think it will take, double it.  

Mortgage -- is this 3.9% 30-year fixed? If it's investment property loan, 3.9% maybe a bit too low. However, if you're banking on refi down the road, ARM maybe a better option?

Maybe @Amit M. can provide you some input?

hey @Tatyana S. yes it comes with one dedicated parking and a guest parking spot. 

On the remodel this is what I do daily and actually just redid this unit. The owner just picked real crappy and ugly products. I could literally order all cabinets now and have them by time of closing. 3 weeks was actually giving myself extra time :) 

The rent is what scares me, there isn't many rented units in the building so comps are hard to come by. I did use comps from buildings on the same street but they all offer different stuff. Everybody I have talked to though says anything in the city rents very quick, plus location is very desirable