McGuire Neighborhood - Richmond, VA
Hello everyone,
I would like some help analyzing this deal that I have come across in McGuire neighborhood of Richmond, VA. I'll start with the numbers that I plugged into the rental property calculator.
Purchase price - 25,000
Closing costs - 1,250
Estimated repairs - 25,000
Total project cost - 51,250
ARV - 65,000
Down payment - 10,000
Loan amount, rate, and amortization - 15,000 @0% over 10 years
Monthly P&I - 125.00
Total Cash Needed: 36,250
Monthly rent - 800.00
Expenses (including P&I) - 503.00
Vacancy - 64.00
CapEx - 80.00
Management - 64.00
Prop tax - 72.00
Rep - 40.00
Ins - 58.00
P&I - 125.00
Cashflow - 296.00
CCR - 9.83%
Right off the bat, I will say that this property needs a lot of work. It needs a new roof, new windows and doors, interior and exterior paint, floors need to be buffed or refinished, new refrigerator, new flooring in the bathrooms as well as new fixtures, new lighting fixtures throughout the house, needs some patch work on some the downstairs ceilings, and some landscaping on the outside of the house. The estimated repairs is definitely a ballpark estimate at this point.
I believe I could get the owner to come down on the purchase price and down payment. This would be an owner financed deal with very good terms at 0% over 10 years. I know the owner personally, and he really just wants to get rid of this house which has been vandalized and vacant for a significant time now. He doesn't currently have the money to fix it up and has no mortgage on the property.
I am concerned about both the crime and schools in the area. The house was previously Section 8 and pulling in $850 a month. I am not sure I would want to go this route again, but I am also not sure what kind of tenant I would be able to get in here regardless of whether or not it is Section 8. I am not sure if the VA Hospital does any leasing of housing for veterans who need to be in the area for medical care; the McGuire VA Hospital is right next to the property. This would be my first deal; I believe it is a big undertaking and risky. I feel that I would learn a lot and it could turn out well, but I would greatly appreciate some feedback on this.
Let me know if I should post some pictures that I took with my phone if that would help.
Thank you!