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Real Estate Deal Analysis & Advice

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Ian Livaich
  • Attorney
  • Cherry Hill, NJ
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Advice on First Deal Numbers/Analysis

Ian Livaich
  • Attorney
  • Cherry Hill, NJ
Posted Mar 6 2018, 13:30

Hey everyone,

I am considering putting in my first offer on my first property wanted to get everyone's thoughts.  This is a duplex in a very desired area of South Jersey with easy train access to Philadelphia.  The duplex is a class B-/B property in a B+/A- area.  

All feedback is welcomed.  If some of my numbers are not realistic, please do not hesitate to let me know.  I appreciate your honesty in advance.

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OFFER SPECIFICS

  • Listing price = $230,000
  • Potential Offer = $175,000
  • Expected renovation costs = $50,000
  • ARV = $300,000 (this is a conservative estimate and could be closer to $325,000 depending on rehab level)

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INCOME

  • 3 Bedrooms = $1,800/month (includes water and sewer in rent)
  • 2 Bedrooms = $1,400/month (same utilities included)
  • (1) 2 Car Garage = $0 (My agent says I could rent this for $150-250/month but I wanted to be conservative and exclude it)

TOTAL INCOME = $3,200/month or $38,400/year

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EXPENSES

  • Taxes = $808/month
  • Insurance = $110/month
  • Utilities = $0 (built into rent but I am still exploring doing RUBS for water, sewer, and heat)
  • Landscaping = $0 (built into rent)
  • Capex (6.25%) = $200/month (I usually use 7-8% but lowered this because of the high rehab)
  • Repairs (6.25%) = $200/month (same reasoning as capex)
  • Vacancy (6%) = $192/month
  • PM (8%) = $256/month (we will be self-managing)

TOTAL EXPENSES = approx. $1800/month

NOI = $1400

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MORTGAGE

  • Lender will finance 70% of the purchase price, 100% of the rehab.  
  • Finance Amount = $172,500 
  • Downpayment = $52,500 
  • Total Mortgage = $225,000
  • Mortgage Payment = $1,034 (assuming 25-year amortization and a 5.25% interest as the property will be held by an LLC)

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CASH FLOW

  • Approx. $366/month or $4,392/year with PM 
  • Approx. $622/month or $7,464 without PM

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CoCROI

  • Approx. 7.5% with PM cost included 
  • Approx. 12.8% without PM cost included 

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Total ROI

  • Approx. 13% with PM
  • Approx. 18% without PM

If you made it this far, I appreciate your time and welcome all of your comments, suggestions, and feedback.  

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