Need help to decide on my first rental investment
Hi All,
I'm a newbie here. Since I found out about BP (5 days ago), I have done a lot of reading on here. One of the most important key takeaways is always asking for advices from BP masters. I live and work in Sandy Springs, GA. I was approached on 2 condo package deal $200K in a very good location in Athens, GA. These 2 condos are updated (look very nice). The current owner rents it out for 1000/unit.
These are my numbers. Vacancy rate 5% (seems low but it might be 0% since it's a college town and at high demand location.) Maintenance/Repairs is 5%. Current assumption is that I won't need PM. My sister goes to UGA so I think it's easy to have tenants . But again this is my first time, I dont know a lot of things.
First of all, any feedback on this analysis and recommendation to improve it are appreciated.
How are Cap rate % and ROI %? Is it a go or no go? My setback is HOA ($125/month per unit)
| Cost Assumption | |
| Purchase Price | $200,000 |
| Land Value | |
| Building Value | |
| Improvement | $500 |
| Closing Costs (2.5%) | $5,000 |
| Total Cost | $205,500 |
| Financing Assumptions | |
| Downpayment | 10% |
| Finance Amt | $180,000 |
| Downpayment Amt | $20,000 |
| Interest Rate | 4.5% |
| Mortgage (Years) | 30 |
| Mortgage Pmt | $965 |
| Key Values | ||
| Cost/ Unit | $102,750 | |
| Cap Rate | 7.4% | |
| Cash ROI | 14% | |
| Total ROI | 33% |
| Yr 1 | |
| Revenues | |
| Rental Income | $24,000 |
| Vacancy Rate | -$1,200 |
| Net Rental Income | $22,800 |
| Other Income | $0 |
| Gross Income | $22,800 |
| Expenses | |
| Property Taxes | $3,000 |
| Insurance | $400 |
| Property Mgmt | $0 |
| Maintenance & Repairs | $1,200 |
| HOA | $3,000 |
| Total Expenses | $7,600 |
| (NOI) | $15,200 |
Thanks for your help!
Hannah