1st purchase - does this make sense?

Question

I am looking at purchasing my dad's house as he gets ready to move into a retirement center and was looking for an opinion on my simple financial proforma on the house.

I am a first timer and normally would not be looking at a full retail value purchase, but it is my dad.

Finance   - $164,500 @ 4.5%

$    10,008

Maintenance

$    2,400

Insurance

$    1,641

Taxes

$    1,372

Rent

$    18,000

Net Profit

$    2,578

NOI

70%

DCSR

1.26

Any thoughts would be greatly appreciated.

Scott Schultz · Answer

unless you are seeing a appreciation upside, thats a huge investment for $215/mo positive, how long is the amortization on the loan?  my target on SFR  is $250/mo. positive (for calculation only) financing 100% including rehab @5% on a 10 year amortization, im getting that done all day, your market cant be that different than here in WI

Jason Hawk · Answer

To me the numbers don't look bad assuming they are accurate as far as rent, etc.   feel free to message me as I'm from KC area and I'd be happy to assist in any way possible

Jason

George P. · Answer

you are getting 1500 per month in Kansas?  really?

anyway,  this house is too expensive.  you won't make much per month.

Mike C. · Answer

Hi Scott,

There isn't a whole lot of information to work with in your post without knowing where the home is located (to see if your rent estimate is good), whether the maintenance cost is reasonable given the age/condition of house, etc.

The two main questions I'd have on the info you did provide are whether you're accounting for vacancy, utilities, and property management costs, even if you're initially expecting to self-manage.

Regards,

Mike