New to investing, just purchased my first deal and think I did ok. Want some advice/feedback here. I am thinking about pulling out my equity, there is a CU around here that will do 100% LTV.
Rent: 600 + 645 = 1,245
Put 15% down
P&I = 270
Taxes = 400
Water (Tenants pay everything else) = 30
Repairs (Est) = 124.50 (10%)
Management (I manage for now though) = 124.50 (10%)
Vacancy = 62.25 (5%)
Cash flow = 233.75
Even with the property management fees that's a 29.58% return on equity and that's taking into account total cash to close estimate. That's a solid return my man. Also, good job on getting the 2% rule on your first deal.
Was it fully leased when you bought it? Does it need any renovations? I'm assuming at that price it needs a little work, just a stab in the dark.
One thought I have is that you account for 10% for repairs but I would also strongly suggest that you account for 10% for capital expenditures. Would suck to have to replace a roof if you have not been saving for it.
10% cap ex in addition to 10% repairs?
Also place was not rented when purchased.
I put a few hundred bucks into it and did about 10 hours of work myself
Congrats! I agree with the others and depending on the age of the property, set aside a little bit of money on your pro forma for cap ex. Cheers
So is it currently fully rented? Also, maybe not now but in the future I would suggest adding a required return on your time (i.e. $25-$30/hr) and factoring that into the total cost of rehab. That may not be applicable now but in the future when you grow and you get more busy, opportunity cost becomes an issue fast. Sometimes it makes more logical sense to hire a sub
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