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Updated about 9 years ago on . Most recent reply

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Hannah Ly
  • Atlanta, GA
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5
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Need help to decide on my first rental investment

Hannah Ly
  • Atlanta, GA
Posted

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

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