A few deals analyzed - needs constructive critique
Hello there! Before I start on the deals, just want to say thank you in advance to those reading this, and the BP community overall for this incredible resource.
I've got a few opportunities available for our first buy & hold rental. Some context - wife and I are looking to diversify a bit out of the market, get some passive income that we can reinvest in more properties over time. We live in Colorado, which is a difficult buy + hold market, so we're looking at out-of-state turnkeys with property management.
Deal 1:
2 bedroom, 1 bath, 768 sq. feet. Memphis, 38128.
$45,000 listed - $650 rent
Taxes: $42, Insurance $40.
Assuming 3% Closing Costs, 20% Down, 30y loan, $171.49 Monthly Mortgage.
$10,058 Cash Required
14% Management Fee (including tenant finding), 5% Maintenance, 5% CAPEX, 8% Vacancy Allowance.
That's a 45% Expense to Rent Ratio. Round up to 50% and it's $325 in monthly expenses.
Annual Numbers: $7,800 Gross Rent, $3,900 Net Income, $2,057.85 Mortgage = $1,841 Annual Cash Flow. 18% Cash on Cash Return, 8.7% Cap Rate.
Seems like a winner?
Deal 2:
4-plex, Cleveland.
$150,000 listed - $2,855 in rents.
Assuming 3% Closing Costs, 20% Down, 30y loan, $611 Monthly Mortgage.
$35,840 Cash Required
14% Management Fee (including tenant finding), 5% Maintenance, 5% CAPEX, 8% Vacancy Allowance.
That's a 53.4% Expense to Rent Ratio. That's $1,524 in monthly expenses.
Annual Numbers: $34,260 Gross Rent, $15,970 Net Income, $7,333 Mortgage = $8,637 Annual Cash Flow. 24% Cash on Cash Return, 10% Cap Rate.
Seems like another winner?
What am I missing?
Thanks again in advance!