Hello Bigger Pockets Friends!
I have been reading forums and listening to podcasts for months, and I am now taking action! I just want some feedback on my first deal that I am working with. On this particular property,3 bed 2 bath, single family. I am still under negotiations but so far I have negotiated the purchase price to $57K. The taxable market value according to the county assessors office is $74500. There are about $5000 dollars in assessments on the property for recent street and water main work. I am working in negotiated these as seller paid, but I may not get them. Rent comps are $900-1000. Taxes with assessments are $1822/year. The property looks to have fairly new siding and roofing. I would clean up the landscaping, pick up all the leaves, trim bushes, pull weeds etc. I would definitely paint the interior to freshen it up and consider new carpet and kitchen flooring. Other than that, it should be ready to rent. My PITI for this purchase will be approximately $441/month. Assuming 900/month rent and 200/month for Capex and repairs. Thats 259/month cashflow with 27% Cash on Cash return. Am I calculating these numbers correctly? AND how would I go about calculating what the ACTUAL market value is, and not rely on the county assessor numbers. Current fannie mae rule is 6 month seasoning for Refi. I would like to cash out refi my initial investment. Please Comment!! Thank you!
@Isaac Braun If I work backwards from your 27% CoC return: Annual cash flow 3,108 which is 259 x 12 months.
Total cash invested = 3108/0.27 = 11,511 which as far as I can tell is just your mortgage down payment (assuming 20% down)
Your total cash invested is actually down pmt + closing costs + any improvements to get it rent ready. You might have a 5000 tax assessment if seller doesnt pay that, and you are also talking about new carpet/flooring/paint which could be thousands. I think you need to include more in your total cash invested, so somewhere around $18,000 to account for those things which would result in around 12% cash-on-cash. Hope that helps.
Thanks @Jason DiClemente ! I had a feeling using the tax assessment for home value was not the way to go about it. I will ask my agent about comps in the area to get a better picture what the property is actually worth. And I will make sure to include ALL expenses in my COC calculations. Thank You!
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