Help me analyze a this deal

2 Replies

Off market condo in class C area with tenant in place on month to month who doesn't want to move. If tenant did vacate unit would require $4-7k to get rent ready.

$230k sale price

Current rent $1675 approx $125 below market.

New roof in 2010 and furnace in 2013.

HOA $145

Tenant pays utilities and owns appliances.

With conservative estimates for PM, Cap X, M & R, plus taxes and insurance it looks like this is going to be a negative cash flow deal even if I raised rents to market value. 

Am I missing something?

What all does the HOA fee cover? If it is all external aspects of the building (roof, siding, AC?), you might not need a conservative CapEx and Maintenance percentage.

What are your "conservative estimates"?

When looking at a property which includes a HOA fee, the CapEx and maintenance are things that you need to take a close look at.

That said, a mortgage payment on this would be close to $1100 per month if you put down 20% - that only leaves $575 per month for your other expenses. Most likely, you are correct that this is a negative cash flow. Hopefully I gave you some other food for thought to help lighten the blow ;)

Originally posted by @Ben Wilkins :

What all does the HOA fee cover? If it is all external aspects of the building (roof, siding, AC?), you might not need a conservative CapEx and Maintenance percentage.

What are your "conservative estimates"?

When looking at a property which includes a HOA fee, the CapEx and maintenance are things that you need to take a close look at.

That said, a mortgage payment on this would be close to $1100 per month if you put down 20% - that only leaves $575 per month for your other expenses. Most likely, you are correct that this is a negative cash flow. Hopefully I gave you some other food for thought to help lighten the blow ;)

The HOA is common areas and nothing more I believe. All my estimates for M&R and such were in the 8-10% ranges and there was no meat left on the bone. Going to keep hunting. Thanks for your insight.

Join the Largest Real Estate Investing Community

Basic membership is free, forever.