Real Estate Agent · Naperville, IL · Member since 2016 · 27 posts · 5 votes
Looking at purchasing my first rental (Go Big or Go Home, Right??). These numbers came from the current owners Trailing 12. What do you think of this deal? What am I Missing?
Lender · Playa del Carmen, México · Member since 2014 · 2k+ posts · 1k+ votes
9y
@Lauren Apicella I'd still want to do some serious due diligence, but on the face of it nothing about those numbers scares me off. I'd want to dig deeper into the quality of the tenants (& leases) and the physical condition of the units.
That said, the decision to do a deal or not only makes sense in the context of available opportunities. For example, in my market (Atlanta) I can craft deals with a cash-on-cash return of 12-14%, so a 10.68% return is not as interesting. However, for someone currently earning 5%, this deal might be a gift from the heavens!
$3000/year in repairs ($250/unit/year) seems awfully low. I'd recommend at least doubling that. You should also check the units carefully for deferred maintenance.
I'd recommend using an 8% Vacancy Rate (1 month out of every 12), just to be conservative.
Lender · Playa del Carmen, México · Member since 2014 · 2k+ posts · 1k+ votes
9y
@Lauren Apicella I'd still want to do some serious due diligence, but on the face of it nothing about those numbers scares me off. I'd want to dig deeper into the quality of the tenants (& leases) and the physical condition of the units.
That said, the decision to do a deal or not only makes sense in the context of available opportunities. For example, in my market (Atlanta) I can craft deals with a cash-on-cash return of 12-14%, so a 10.68% return is not as interesting. However, for someone currently earning 5%, this deal might be a gift from the heavens!
Real Estate Agent · Chantilly, VA · Member since 2016 · 245 posts · 61 votes
9y
In my opinion, it sounds like a great starter deal and as @Mitch Messer has mentioned, get an inspection done and maybe you'll find ways to bargain alittle on the price. Good luck, keep us posted.