Deal Analysis
Hey Everyone
I am super motivated and excited to start my REI journey and i am currently trying to figure out how to purchase my first rental property; i am currently reading @Brandon Turner 's book on how to invest in real estate with no money down. But I have always been told that analyzing the deal is the most important.
For now I have set out to look for homes using the 1% rule. One home that i am looking at is about 3 streets away from my own home. its a 2bdr 2bath with a basement and an attic that maybe able to be converted to a 3rd bdr.
Base on my lay man analysis with my realtor, it looks like mostly cosmetic work,with the bathrooms, floor and kitchen in decent shape but there is some mold on the lower part of the walls in the basement which i figure was as a result of some kind of flooding. The property is not in a flood zone though - so i figure that we would have to rip the dry wall and install new ones.
Current asking price is 156k
Even though it is a a buy and hold, I intend on offering somewhere around 90k taking into consideration all the costs that i will incur at purchase in addition to the a rehab of about 15k and another potential rehab if i decide to sell the property in a few years and try to walk away with some profit thanks to and article i read by @J Scott
I am still trying to figure out the aspect of purchasing this property and fixing it up with no money down.
The rental prices in the Rahway Nj area for a decent condition property is about $1850. I am trying to analyze the number to see if this is a good purchase.
Number
Asking price 156k
I want to offer 96-120k (what would be a reasonable offer)
Fixed Costs 28k
Rehab Cost 15k
Here are my calculations (which i hope are correct)
| Rent | $1,850.00 |
| Mortgage | $1,218.00 |
| Property Tax | Included in Mortgage |
| Insurance | Included in Mortgage |
| Property Management | $185.00 @ 10% |
| HOA | |
| Vacancy | $185.00 @10% |
| Maintenance Repairs | $185.00 @10% |
| Monthly Expenses | $1,773.00 |
| Cash Flow | $77.00 |