Skip to content
Real Estate Deal Analysis & Advice

User Stats

14
Posts
0
Votes
Mike G.
  • Colorado Springs, CO
0
Votes |
14
Posts

Help- Indianapolis Property Analysis

Mike G.
  • Colorado Springs, CO
Posted May 29 2016, 19:46

Hi everyone,

I am hoping you can help me out on the analysis of a potential property.The property is a 2 bed/1 bath located in Indianapolis.

Notes per the agent:

  • There are NO appliances in the home (assuming I need to add about $1200-1500 for a fridge and oven immediately)
  • The roof is “older” (900 sq ft home- I am assuming it will cost about $5000 to replace in a few years?)
  • Heating and cooling is ~10 years old (assuming it would cost $3000 to replace in a few years?)
  • Electric is 100 amp service
  • ‘Some’ plumbing has been updated
  • Newly painted and carpeted (good- no costs immediately there)
  • Basement gets seepage (??? No idea how much this would cost, or if it even needs to be fixed since the basement is unfinished and just used for laundry)

Below are my calculations of the property based on the list price, not taking into account the status of the components.My question is: what would be a good offer price based on the information above, and the given assumptions below? Should I just run? Any critiques would be much appreciated!

List price: $45,000

Down Payment: $6750 (assuming 15% down, due to lender allowing 15% down)

Loan amt: $38250

Monthly mortgage payment assuming 4.5%, 30 year mortgage: $193.81

Per Month Calculations:

Rent: $700 ($750 Zillow estimate, so just assuming less than that to be safe)

Less Vacancy (8%): ($56)

Net Rental Income: $644

Insurance: Assume $66 (based on another similar property we have in Indy totaling about $800 per year)

Property Taxes: $67 (based on ~$810 annual)

CapEx (8%) at $56

Maintenance (6%): $42

PM (10%): $64.40

Total expenses: $296.57

Net Profit before mortgage pmt: $347.42

Less Mortgage payment: $193.81

Net Cash Flow per month: $153.63

Returns

Initial down: $6750

Closing costs: $1800 (assumption based on 4% of list price)

Total cash paid: $8550

Cash on Cash return: 21.6%

Payback period: 4.64 years

Thank you in advance!

Loading replies...