For my first deal I'm looking at the following, please let me know your thoughts:
NJ Condominium in C+ neighborhood about 30 minutes from me, I plan to self manage.
1 Bedroom 779 sq ft.
Good condition, move in ready.
Purchase Price $80,000
Taxes: almost $2,800 (Annual, $233 monthly)
HOA/Maintenance: just under $375 (Monthly) trying to be conservative
Insurance: $50 (Monthly)
Total monthly cost:
Mortgage (4.5%, 30 yr fixed, hold for 20 years) $324
Vacancy (5%) $67
Maintenance (1,000/12) $83
Other (200/12) 16.67
Rental Income: $1,350
Cash Flow $200
IRR 19.97% per year
Profit when sold $173,828
Cash on Cash Return 914%
Cap Rate 1.93%
Looks pretty good. Am I missing something?
Thanks for any help!
Repairs. You didn't mention condition of the property.
You didn't mention down payment or closing costs. Your cash on cash return doesn't make sense.
Is Sewer in your "Other" estimate?
If you add CapEx and property mgmt, it barely cash flows. If your vacancy is more than one month or you have to pay a fee to get a renter you're out of money.
@Jeff Spector If you can buy for $80K and sell for $173K then just flip it. I don’t think that’s what you’re posting so, consequently, your cash-on-cash return doesn’t make a lot of sense. Nor does your cap-rate and that’s avoiding the third-rail of falsely using cap-rate as a value analogue for SFRs or sub 5-unit properties. Plug your numbers into the BP calculator and post the results. Your first analysis doesn’t make a lot of sense as presented.