Need help looking at potential deal

1 Reply

Hello everyone, 

I am looking to purchase a SFR and I'm not 100% sure if this is a good deal or not. Also, I don't really know much about the seller other than he is part a meetup in my area and he has a investment company but this is only one of the the two listings he has. Lastly, I am not too familiar with the area aside from knowing that it is in a lower income neighborhood. However, I looked at rentometer, zillow and craigslist and they all support the rent below and potentially a little higher. Any help analyzing this deal would be much appreciate.

3 bedroom 1 bath. 

$39999.00 Purchase Price

$11700.00 Annual Rent ($975 Monthly)

$1416  Yearly Property Tax

I'm not sure on insurance, I have to wait until tomorrow to get a quote. However, my triplex is roughly $400 per unit a year.

I'm assuming 10% Vacancy, 10% Maintenance and 10% property management (however I'll probably do the property management my self)

I've high balled the calculator on BP and I still get around a 20% cash on cash. 

At that price, you're going to get an unbelievable CoC return. My questions...

How much rehab is required for it to be rental ready? 

Is a standard 10% Vacancy rate enough?  (In a lower income area, you will often need to increase your vacancy reserve as people tend to be more mobile and more likely to encounter issues, which would require them to move.  You can partially mitigate this by making your property one of the nice rentals in the area, but you don't want to over-improve.)

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