I have been looking at homes to buy for my first rental property, and have been using the quick four square method for analyzing rental property. I came upon a property that seems to be a decent deal and seems to cash flow when I put it in the analyzer, but I would like to get some feedback/suggestions. I would be putting 20% and in the area rent would be between 900-1000 a month. This is the link to the property https://www.trulia.com/property/5031269464-11-Dustin-Ter-Nash-TX-75569
Okay, I do NOT do this for everyone, but no one was answering you and we're both newbies, plus I need the practice, so I put your property into the BP Rental Property calculator and in my opinion, it's not great. The numbers I was told you want are a MINIMUM of $100 per unit (though most folks say that's way too low for a SFH or even duplex-quadplex) and at least 12% cash on cash ROI. The calculator says your cash flow would be $129/month (not great, but depending on your goals, not too bad) but your cash on cash is only 7%. I think there are better deals out there, but that's just my opinion. Also, I had to make some assumptions, like your closing costs will only be $3k and you will only put away 5% of your income for repairs and another 5% for big ticket items and you will only have 5% vacancy rate. 10% is probably a smarter choice. Any of those could be off from what you plan or what really happens.
Upgrade to plus or pro and use the calculator. It's a great tool if you're just getting started. I'm just getting started as well and have analyzed tons of deals with their calculators being a plus member. I've heard of some people shooting for $300+ per door and greater than 20% CoCROI. Also, call the bank to get REAL numbers on closing costs, interest rates, etc. Check with insurance to figure their rates. Figure out the taxes, comparable rents, and be conservative in your estimates for Capex, repairs, vacancy, etc. It's better to know hard numbers than to guess or speculate as that's when you go from what you think to be a good deal into one that's negative cash flow or not as good as you had hoped.
Thank you Jody the information gave me more insight on what to look at and think about. Tim also thank you for the information. I have been looking at rental rates in this area, and still trying to learn what a normal rate will be for certain houses. I am going to talk with some people in town that know more about rentals also. I have been looking at property taxes online to figure those numbers out too. Yes that is one thing I don't want to do is buy something that will bring negative cash flow, or just make a really bad investment for my first property.
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