Help with deal analysis - Buy & Hold SFR

6 Replies

Good afternoon,

I'm new to BP and getting acclimated to the site and the resources available to me.  I'm doing the BP 90 Day Challenge and I'm looking for some advice.  I'm using the Rental Property Calculator daily to analyze different properties in my area.  I've also participated in Brandon Turner's "How to Analyze Rental Properties for Maximum Cash Flow" webinar.  Using his advice to start and then applying my market data to these deals I seem to be seeing relatively high COCROI (+12%) on all deals analyzed.  I'm wondering if there are other BP'ers willing to take a look at one of my deals to see if there is something I'm missing in the analysis or if there are assumptions within my deals that I'm underestimating.

Here is the link to the deal - https://www.biggerpockets.com/calculators/shared/916449/7da6c614-e8cc-41b9-9e15-965565b159ba

About the assumptions:

This is the Charlotte NC area

Purchase price shown is the current asking price

Property taxes are from the assessor's office and the monthly income is the average for 2 beds in Charlotte.

My goal for deals is cash flow.

Any and all thoughts/suggestions are welcome!

Thank you in advance!

Mike

Looks like a decent deal - have you already identified your source for 4% 30 year money?

(949) 391-9535

What are you planning to do with the $5k rehab budget?

Jake Roland, Real Estate Agent in AL (#111014474)

How reliable are the monthly rental income numbers? Is the $1,400/month figure the current rent, or market rent? Stress testing your expenses in a worst case scenario where you need to replace a large ticket item down the line is a safer way to ensure that the property will always cash flow.

Also the only thing catching my eye is the ARV stays at the purchase price even after putting in $5,000 for rehab. Is there no value added rehab work that you’re doing?

Howdy @Michael Shea

Listing states "Renovated. Lots of updates." Why do you need $5K for Rehab? Put that money in your reserves. If you were to pursue the deal you should have the property inspected to determine the condition and life expectancy of all major components and appliances. Use that report to determine what your actual CapEx reserves requirement should be. It might be lower than 10%. Anyway you can have the $5K as a starter.

Find out what the FMV is so you know if you are overpaying or not.

Vacancy might be a little low.  I would keep it at least at one months rent or 8.4%.

Overall your analysis looks good.

@Eric Taylor Thanks for the response!  I have not identified a source for financing.  This is merely an assumption based on current rate environment.  Identifying lenders, pre-approval, starting to walk properties are part of my plan but I'm thinking of starting after I complete the 90 Day Challenge to better familiarize myself with analyzing deals as part of my learning process.

If there are better ways to plan or different ways I should think about this I'm all ears!

Thanks again!

@Michael Shea I think your rental estimate is way too high. I just quickly checked craigslist for 2BR in the same area of Charlotte and I'm seeing $850-$1300; and most of the units on that higher end are in town homes. Most SF are around $1000. 

Additionally, zillow has a similar home (2BR, 1000sqft) for rent listed on the same road directly across the street for $950.


How does your analysis look using ~$1000?

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